Share prices are determined by the offset between buyers and sellers, and represent a true (if not merited) market price for the equities in question. When buyers buy, prices rise in response to the demand pressures on stock. When sellers sell, the reverse happens, and market prices slide away, and the capital investments of many traders and savers with it. When it comes to determining what triggers these behaviours, understanding market mentality becomes obviously critical, and ignorance can cause significant damage to both self-confidence and capital. As a result, shrewd traders keep a close eye on market news, in order to get a better feel for market sentiment and to more ably predict how markets will move in response.
Market news can sure up potential investments, or cause panic about investors getting their expected return. If a market sees good news, there is a more than fair chance share prices will rise, and where the news is negative, share prices will probably slide. It’s important to know the news therefore, and to be up to date with current events, in order to make more logical trading decisions that prevent loss and generate a profit.
The Relevance Of Stock Market News
News and current affairs shape the way traders and investors think about the future. Whenever capital is invested in shares, it is done so on the anticipation of capital growth over time, and possibly regular dividend payments too. Anything that jeopardises these potential objectives, including the possibility of other shareholders panicking, will drive the large investment institutions to sell off and shift the price of the relevant stock heavily downwards. In large part, investment institutions and other cautiously minded trading funds shape the markets, because of their sheer trading volume in comparison to individual traders. This has the impact of making markets highly responsive to news good and bad, which makes it essential research for anyone looking to generate a serious capital return.
What News Matters?
The whole global economy is interrelated, so there’s a world of news to choose from that may be relevant to any given market or stock price. Civil war in Africa might disrupt natural gas supply for example, which could filter through as a negative factor for gas supply companies in Europe. There can be no shortcut to understanding what news matters specifically to your markets – only through getting to know the market and researching the factors, issues and interplays with other markets can you begin to get a feel for the types of news that might have an effect.
Aside from merely following the news, it’s also important to interpret it and the likely impact it will have on the mindset of investors in your market. As you become more experienced, interpretation of news data, in conjunction with technical analysis, will become a much more natural process. In the interim, it’s important to hit the ground running with a constant view to what’s going on in the world and around the markets and economies in which you invest.