Factor affecting performance of stock market

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Factor affecting performance of stock market

More often than not, stock prices are affected by a number of factors and events, some of which influence stock prices directly and others that do so indirectly. Stock price movements will be most drastic when these internal developments are unexpected.

Factor affecting performance of stock market

World Events Company stock prices and the stock market in general can be affected by world events such as war and civil unrest, natural disasters and terrorism. These influences can be direct and indirect, and they often occur in chain reactions. The social uncertainty and fear generated by the terrorist attacks on Sept.

An example of an indirect influence on markets is the announcement of a new military venture by a country in response to the outbreak of civil unrest or conflict abroad.

This announcement likely would cause the price of the stocks of military equipment and weapons manufacturers to rise due to an expected increase in defense contracts, which in turn can raise the value of stocks for companies that supply military equipment parts and technology. It likely would raise the demand for, and price of, natural resources used to make these parts, which would raise the price of stocks representing particular mining and natural resource processing companies.

Inflation and Interest Rates One of the more predictable influences of the stock market are periodic adjustments of interest rates by the U. Federal Reserve to combat inflation. When interest rates are raised, many investors sell or trade their higher risk stocks for government-backed securities such as bonds to take advantage of the higher interest rates they yield and to ensure that their investments are protected.

Exchange Rates Foreign currency rates have a direct impact on the price and value of stocks in foreign countries, and changes in exchange rates will increase or decrease the cost of doing business in a country, which will affect the price of stocks of companies doing business abroad.

While long-term movements in exchange rates are affected by fundamental market forces of supply and demand and purchase price parity, short-term movements are driven by news, events and futures trading and are difficult to predict. Hype Stocks and the stock market also can be affected by hype about a company or the release of new products or services.

Many people and organizations have an interest in promoting particular stocks and industries to increase the value of their own shares and profits, and positive financial reports and stock market newsletters, Internet blogs, press releases and news reports can build high expectations for the performance of companies, which will raise the price of their stocks.factor-based investing approach, however, have additional and crucial issues to consider, including their tolerance for active risk, the investment rationale supporting specific factors, and the cyclical variation of factor-based performance.

Foundations of Factor Investing Jennifer Bender Remy Briand Dimitris Melas portfolio performance can be explained by factors. This research has been prevalent for over 40 years; Barra (now an MSCI company) for instance has undertaken the research of factors since the s.

returns with three factors: the market _ (based on the. factors on the stock market performance in Sri Lanka. All the factors which have a direct impact on the working of the emerging stock market have hereby studied.

The relationship affecting the other Asian countries have a relative impact on the stock market of Malaysia. It. Important factors influencing share prices The following are the factors that influence share prices 1.

Demand and supply Demand and supply of securities influence price of securities. 16 Important factors that influence share prices. If the stock market is run in a transparent manner with effective regulation then the investors would. 4 Factors Affecting the Stock Market in a Presidential Election Year.

Here are four factors that affect stock market performance amid presidential elections. 1. Presidential Election Cycle. Abstract. This study investigated personal decision factors influencing investing in capital market, and stock exchange performance in Tanzania as reflected on motivation, abilities, ideas and resources framework developed by Durham business school.

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