Study on the evolution characteristics of stock prices under continuous interference of external events

Abstract Motivated by the increase in external uncertainty in economic and financial systems, the evolution characteristics of stock prices under continuous external disturbances are analyzed. A new model with the direct stochastic and indirect nonlinear effects of external events is constructed to comprehensively reflect the randomness and nonlinearity of stock prices. It is found that the equilibrium price decreases with external uncertainty. Under certain conditions, the equilibrium in the deterministic skeleton is asymptotically stable; when stability is lost, the stock price exhibits either a high-low oscillatory pattern or a closed-loop cycle. Depending on the evolutionary characteristics of the deterministic skeleton, the volatility of the financial system may increase gradually or sharply with the external risk level. In addition, two distinct mechanisms are identified through which external events induce volatility clustering. Finally, evolution characteristics are verified by empirical data.