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How do News Effect Financial Market - Essay Example

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This study, How do News Effect Financial Market, declares that news headlines are periodically reviewed by both the long-term investors and the short-term investors. News which affects the financial markets may be categorized into the positive, negative, indifferent news. …
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Download file to see previous pages Positive news tends to create positive trends in stock markets and due to this reason the share prices seem to rise soon after any positive news is available in the financial markets. Examples of positive news include higher GDP numbers for the following quarters, joint venture agreements, a discovery of oil reserves, above expected financial results, company securing new clients, and so on. But sometimes it can also be seen that the markets close low after positive news. One of the reasons behind such reactions is market speculations and rumors. The financial market participants anticipate new stories and reacts accordingly. If there are rumors in the market, the investor may act surprisingly and the stock prices may experience temporary drop even after positive news. This is the reason as to why all market participants keep the close watch on the market-related news and investment headlines. Keeping updated with the latest news helps investors understand how the news headlines affect the financial markets.
The negative news has far-reaching effects on the investor sentiments and financial markets compared to positive news. It is often seen that when there is the slightest bit of bothersome among the market participants, the stock markets crash. Such negative news includes company involved in fraudulent practices, insider trading, economic disasters, unemployment, and so on.
The financial market reacts almost immediately to the external macroeconomic events and influences the financial performances of companies. ...Download file to see next pagesRead More
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