Often, the stock price of the companies in the same industry will move in tandem with each other.

Factors Affecting the Stock Market | Economics Help

This is because market conditions generally affect the companies in the same industry the same way. But sometimes, the stock price of a company will benefit from a piece of bad news for its competitor if the companies are competing for the same market. Investor sentiment or confidence can cause the market to go up or down, which can cause stock prices to rise or fall.

The general direction that the stock market takes can affect the value of a stock:. The Bank of Canada can raise or lower interest rates to stabilize or stimulate the Canadian economy. This is known as monetary policy. If a company borrows money to expand and improve its business, higher interest rates will affect the cost of its debt Debt Money that you have borrowed.

You must repay the loan, with interest, by a set date. This can reduce company profits Profits A financial gain for a person or company. Equals the money left over after you subtract your costs from the money you made. As a result, its share Share A piece of ownership in a company. But it does let you get a share of profits if the company pays dividends.

Factors that can affect stock prices | Stocks | bozunoteyuta.web.fc2.com

And, in times of higher interest rates, investments that pay interest tend to be more attractive to investors than stocks. If it looks like the economy is going to expand, stock prices may rise. Investors may buy more stocks thinking they will see future profits and higher stock prices.

If the economic outlook is uncertain, investors may reduce their buying or start selling. Inflation Inflation A rise in the cost of goods and services over a set period of time. This means a dollar can buy fewer goods over time.

In most cases, inflation is measured by the Consumer Price Index. This often slows sales and reduces profits. Higher prices will also often lead to higher interest rates. For example, the Bank of Canada may raise interest rates to slow down inflation.

These changes will tend to bring down stock prices. Commodities however, may do better with inflation, so their prices rackspace stock price yahoo rise. Falling prices tend to mean lower profits for companies and decreased economic activity.

Stock prices factors affecting performance of stock market go down, and investors may start selling their shares and move to fixed-income investments like bonds. Interest rates may be lowered forex krungsri encourage people to borrow more. The goal is increased spending and economic activity.

The Great Depression was one of the worst periods of deflation Deflation A drop in the cost of goods and services over time.

Often happens when the supply of money or credit shrinks, or when consumers or government cut spending. This means the same number of dollars will buy more. Changes around the world can factors affecting performance of stock market both the economy and stock prices.

Factors that can affect stock prices | Stocks | bozunoteyuta.web.fc2.com

For example, a rise in energy costs can lead to lower sales, lower profits and lower stock prices. An act of terrorism can also lead to a downturn in economic activity and a fall in stock prices. If a new government comes into power, it may decide to make new policies.

Sometimes these changes can be seen as good for business, and sometimes not. They may lead to changes in inflation and interest rates, which in turn may affect stock prices.

Many Canadian companies sell products to buyers in other countries. If the Canadian dollar rises, their customers will have to spend more to buy Canadian goods.

This can drive down sales, which in turn can lead martin feldstein inflation and the stock market lower stock prices.

When the price of the Canadian dollar falls, it makes it cheaper for others to buy our products. This can make stock prices rise. Stay informed about the latest investor initiatives, educational resources and investor warnings and alerts.

Company news and performance Here are some company-specific factors that can affect the share price: Investor sentiment Investor sentiment or confidence can cause the market to go up or down, which can cause stock prices to rise or fall. The general direction that the stock market takes can affect the value of a stock: Often happens when an economy is in recession and unemployment is high, with rising prices.

Often provides voting rights in some business decisions. It often happens when an economy is in recession and unemployment is high, with rising prices. Interest rates The Bank of Canada can raise or lower interest rates to stabilize or stimulate the Canadian economy.

Economic outlook If it looks like the economy is going to expand, stock prices may rise. Inflation Inflation Inflation A rise in the cost of goods and services over a set period of time. Deflation Falling prices tend to mean lower profits for companies and decreased economic activity.

Economic and political shocks Changes around the world can affect both the economy and stock prices. Changes in economic policy If a new government comes into power, it may decide to make new policies. The value of the Canadian dollar Many Canadian companies sell products to buyers in other countries. Key point Stock prices can be affected by: Related Content Financial Life Stages of Older Canadians Principal protected notes PPNs Monitoring interest rates 3 factors that affect bond prices Bonds.

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