XAO seems to occasionally act as though it was a derivative of the underlying US market with higher volatility than the US markets. It depends on how you would like to view it but for most purposes this is a fairly accurate representation.
Any potential slowdown in the US market will likely have a fairly significant effect on China and most of the exporting economies of the world and thus roll on to effect our markets, our interest and currency exchange rates, and the business cycle here.
Of course there is an extra volatility component that comes from the time zone difference where many investors will tend to take a 'better-safe-than-sorry' and jump the gun to take action and sell/buy in over-reaction to any downturn/upturn in the US market.
