15 Major Factors That Affect Share Prices

david123 By david123, 13th Nov 2017 | Follow this author | RSS Feed | Short URL http://nut.bz/1e-1zdqm/
Posted in Wikinut>Business>Investment

With the right investment, you can make great profits in the stock market. However, you need to understand that this is a very volatile market. You may invest in a company that shows promise only for your investment to be worthless.

15 Major Factors That Affect Share Prices

With the right investment, you can make great profits in the stock market. However, you need to understand that this is a very volatile market. You may invest in a company that shows promise only for your investment to be worthless. If you are thinking about investing in the stock market, it is imperative that you understand the factors that affect the stock market. This article takes a look at the key factors that affect the Australian share prices.

1. Demand and supply

These are factors that affect the stock market all over the world. If the demand of the securities is more than the supply, the prices will go up. This is because there are more buyers than there are sellers. The prices will go down when the demand is low. Needless to say, if you have confidence in a company, it is good to buy their shares early before the prices go up.

2. Bank rate

Another factor that impacts the Australian share prices is the bank rate. When the interest rate being given by banks is lower, the demand for funds is higher and the demand for the securities is high. On the other hand, when the bank rates are higher, the demand for funds is lower hence the demand for the shares is lower.

3. Market players

The market players will also have an impact on the overall price of shares. If there are more bulls than bears, the prices will increase. The opposite happens when the bears are more than bulls.

4. Dividend announcements

The dividends are basically signals for the movement of the share price. The announcements will affect the price. If a company announces the dividends, the share prices of such companies tend to go up. It is good to note that if the rate of the dividend announced is less than expected by investors, the prices of the shares will go down and vice versa.

5. Management profile

Prior to buying shares, investors take the time to consider if the company they are buying securities from has the potential for growth or not. Their determination is mostly influenced by the management profile. If the management of the company is made up of experienced and highly educated professionals, then investors will have more confidence. The result is high demand for the shares and high prices. The management body of a company is the key influencer of the Australian share prices.

6. Trade cycle

These are the cyclical fluctuations in economic activity. During the boom season, the prices are usually high and the opposite is true during the depression. The prices increase gradually during recovery. Timing is everything when considering the purchase of stock.

Other factors include:

7. Speculation
8. Political climate
9. Industrial relations
10. Government stability
11. General market sentiments
12. Actions of the institutional investors
13. Foreign investment
14. Credit availability
15. Regulations

Research is a must when considering investing in shares. The objective is to make sure that the Australian share prices will not plummet as soon as you invest your money.

Tags

Share Prices, Stock Market

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