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    Why and how global incidents broadcast in the news affects the stock market?
    I am opening this thread to encourage those who are already in the stock market or those who are thinking to invest in the stock market to discuss about reasons why and how global incidents are affecting the stock market. For example, if we find on the news that the Xyz country posted an x% growth, or the unemployment rate in the US has increased by x%, etc - why and how does it affect the stock market?

    This is something that most newbie finds difficult to understand and that causes them to panic and withdraw. So if you are an experienced stock market investor or traders, please share your thoughts about it.


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    There is a real correlation between events that occur in daily life and the stock market. The effect can not really be predicted because it can either be good or bad for the investors. It can also not be predicted in the sense that you can know whenever an oil rig will explode or a tanker would spill it's oil.


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    In my opinion, the stock market is greatly influenced by news on a daily basis. Speaking on a very basic level, I can say that stock market is mainly affected by two kinds of news, political and economical news. Political news relates to the policy related news of the government which might affect the stock market in the sense that they may promote trade and investment or might discourage it. And the economic related news is the news about the economy of nation which directly affects the stock market because it is the indicator of future movements of the stock market. For instance, if the economy is performing well, then the stock market will react positively as people will believe that they can earn more money by investing, and if the economy is not performing well, the reverse will happen.


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    It is interesting how media does affect almost anything and everything we do. I guess it wouldn't be a big surprise for it to affect the stock market. Everything kinda just goes hand in hand, which makes getting involved a cumbersome road....


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    Media definitely has a huge effect. Basically the stock market is alway trying to predict how well a company will be doing in the future, so obviously all the news relating to that very company or to the economy in general will have some effect.


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    Quote Originally Posted by owesem75 View Post
    I am opening this thread to encourage those who are already in the stock market or those who are thinking to invest in the stock market to discuss about reasons why and how global incidents are affecting the stock market. For example, if we find on the news that the Xyz country posted an x% growth, or the unemployment rate in the US has increased by x%, etc - why and how does it affect the stock market?

    This is something that most newbie finds difficult to understand and that causes them to panic and withdraw. So if you are an experienced stock market investor or traders, please share your thoughts about it.
    I am not very experienced myself (still learning...) but I can say a few things on why economic news has impact on the worth of a currency. Basically (among other things...) unemployment and the current interest rate in the country impacts the underlyign worth of the currency compared to those of other countries. The matter is a bit complex so I would suggest reading up babypips.com - the school and check out the fundamentals on why and how!


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    Quote Originally Posted by DomDom View Post
    I am not very experienced myself (still learning...) but I can say a few things on why economic news has impact on the worth of a currency. Basically (among other things...) unemployment and the current interest rate in the country impacts the underlyign worth of the currency compared to those of other countries. The matter is a bit complex so I would suggest reading up babypips.com - the school and check out the fundamentals on why and how!
    Ahh... but everyone is always learning! It never ends!

    Anyway, thought I'd add a bit more about unemployment.
    It's not complicated. What do people gain from working? Money. What do they do with that money? They buy things. What happens if they don't have money to buy things? Companies selling those things make less profit. And this leads to? The value of their shares decreasing.

    Obviously it works the same the other way around and some industries are affected a lot more than others. As I said the stock market is always trying to predict the future, so when people here that there are a lot of new unemployed people in the country where store X sells high end clothing, investors will think that there could be hard times in the future for store X.


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    Supply and Demand
    From my limited understanding it's all about supply and demand. If the news regarding a company are good the demand (people buying) is higher so the price rises and if the news are bad, the supply (people selling) grows thus the price drops (since more supply is available than demand). And from here we can see why news and always knowing the state of the companies you invest in is very important. It's also the reason why in developing counties or war thorn territories investors are shy to move, there would be little demand due to instability.


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    I'm not an experienced trader but I think those offering stocks for Example Apple can either increase or decrease in value based on the assets, profits and other excess revenues of the company. For example Samsung loses profit and goes bankrupt, naturally the stock representation of their shares in the market would plummet down and people who invested much money there would be in a hurl.


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    Quote Originally Posted by alec View Post
    From my limited understanding it's all about supply and demand.
    Yes, that is exactly what it is alec. Supply and demand drives the stocks up or down. It only makes sense that worldly events would cause a shift in the stock market. For example, when a natural disaster occurs. Things that change could be gas stocks, or maybe certain tech stocks, etc. because people are buying in order to supply the survivors.


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