When it comes to trading inside the stock market many people involved will be curious to find out what is that to influence the share price?! Or put it in another words, what are the factors known to affect the stock prices? Everybody knows that stock prices fall and rise due to the variables that appear as demand and supply.
When a particular stock is chased by more people, its stock price will increase. In case the market displays negative news, traders will sell more than surely, and as such the stock price will go down.
The most commonly met factors known to influence the demand and supply are the following:
1. Dividends – generally speaking, once the stock is ex-dividend, the price is about to fall by the value of the dividend.
2. Market sentiment – if the market is in decline than the stock price will fall, but if the market goes up, so will the most of the prices. A safer way to see where the market is going is to inquire about the index used for your trading, such as it is for instance, the ASX – All Ordinaries for Australian traders.
3. The Company earnings – prices are determined by how the traders perceive the company’s value. In case the company is not as predicted by the traders, this will make the stock price to go down and the opposite will happen in case the company releases better then it was predicted.
4. Unforeseen circumstances – these include natural disasters that can influence the prices and probably the most affected companies would be the insurance companies.
5. Merges, take-over, and acquisitions – once the company is taken over, the price will rise and the opposite will happen with the company that takes over.
6. When rates change – this happens through the central banks releases and as such many investors will wonder what will be the impact on home loan rates and so on.
7. The evolution of the industry sector – can lead to effects on stock price of the companies involved in the specific sector. The majority of these companies will follow the trends, but this can not be the case all the time as other factors can contribute as well.
8. Stock buybacks – this happens when a company decides to buy back the stock as a result of higher market demands, thus the stock price will increase.
9. Company announcements – stock prices vary when investors and traders attempt to predict the management changes, earnings, and industry trends whenever a company makes announcements.
10. War – this is another factor that affects many things in this world, but also the stock prices are affected.?