Macroeconomic drivers of chemical industry stock prices: a comparative analysis of US and German markets

This study investigates the impact of macroeconomic factors—inflation, interest rates, exchange rates, money supply, and crisis events—on chemical industry index prices in the US and Germany, using the Autoregressive Distributed Lag (ARDL) model. The analysis identifies significant long-term relationships and short-term interdependence effects between the two markets. In the US, inflation and interdependence effects from Germany drive index prices, while Germany’s index is more sensitive to inflation, interest rates, and exchange rates. The US exerts a stronger influence on Germany, reflecting its global economic dominance. The findings also reveal faster adjustment to equilibrium in the US and greater resilience to crises compared to Germany. These insights provide valuable implications for investors, policymakers, and industry leaders. This paper examines the effects of macroeconomic indicators—such as inflation, interest rates, exchange rates, money supply, and episodes of crises—on chemical sector indices of the United States and Germany within the ARDL approach. The results reveal significant long-run and short-run relationships, with the US market exercising a larger influence on the market in Germany. The results help to add to the knowledge on cross-market interdependence for an internationally integrated sector, offering practical insights for investors, policymakers, and sector leaders to manage risk, to inform policy, and to make strategic investment decisions.