Sometimes, we Americans act like the World revolves around us. But, even though we had a Major Holiday on the Fourth, the Earth is still spinning, markets still operated, trains ran, etc. The Pacific Rim was somewhat mixed on Wednesday and Europe was up a bit. However, when the World’s Largest Economy (the US) is closed, other markets tend to be merely going through the paces. IF there were a major event, however, such as something with the EuroZone Debt Crisis or the Earthquake/Tsunami in Japan last year, the markets would have definitely responded.
It takes a little getting used to when trying to discern what is going on with overseas markets. They are certainly based on their own economies, Fiscal and Monetary Policies; however, what goes on in the US–and now China–certainly does have an impact on them.
Keep in mind that the Pac Rim markets generally close before ours opens. So, when it comes to any response to the US Markets, you have to always ask if it is based on yesterday’s New York close–or overnight information that might impact us the next day. Europe, on the other hand, may have a same day impact because their markets open before the Pac Rim markets close–and close after ours open.
Besides the time difference, also keep in mind that foreign markets are denominated in their currencies. So, for instance, if you are investing in Australia and their Dollar is expensive, versus the US Dollar, you have to realize that the ForEx (Foreign Exchange) differential could be a drag on your investment performance, at least in the short run.
Another risk to keep in mind is Sovereign Risk–the idea that a new government might not recognize the currency or your financial assets there; however, that should not be a concern with most of the major economies. Also, the accounting systems—-and exchange listing rules–in many countries might not be as exacting as ours.