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Published On: Mon, Feb 19th, 2018

Factors That Can Affect the share price

Now that you have made up your mind to make your presence on the trading platforms felt, it is time to stock up on information. You need to learn about market fluctuations. What affects the prices?

The buying and selling of shares is not done on blind faith. Even though the chances to suffer losses are there, investors check out the firms and company they plan to invest in. Changes in company administration are taken seriously. A new CEO is investigated and vetted by investors and what they find out may influence important decisions. New investors either come on board or search elsewhere. Old investors may decide to pull their investments or boost them. Looking up trading platforms like Lloyds share price cangive you some insight into how share prices rise and fall.

photo/ См. ниже via wikimedia commons

Apart from a change in leadership, the following factors also affect share prices:

1. Performance

The media will always announce changes in a company or any other news pertinent to the success or failure of a large firm. The investor is specifically interested in:

  • Earnings (present and future) and profits.
  • Dividends.
  • New product release.
  • Product recall.
  • Worker turnover.
  • Takeovers mergers.
  • Scandals involving accounting or senior management.

Industry performance is as important as company performance. Usually, market conditions in any industry will have the same effect on the companies in the same industry in a uniform way. However, a scandal involving one company may be an advantage to another company if they compete in the same market.

2. The Investor

Confidence or the lack thereof in a company can cause price fluctuation. Investors can have emotional reactions to a company based on any number of factors and cause prices to either fall all rise. Stock market falls into these categories:

  • Bull market: this is a strong market where prices are on the rise and the investor is happy and confident. Factors leading to a bull market are: investor enthusiasm, economic recovery, and an economic explosion.
  • Bear market: this is a weak market. The prices are falling and investor morale is waning. This happens often in a recession or when the company is hit with a scandal of monumental proportions. 

3. Economic aspects

These include:

  • Interest rates
  • Projected economic direction
  • Inflation
  • Deflation
  • Politics
  • Alterations in economic policies
  • Value of money

All these play a role in determining whether markets are stable or they will fluctuate. Political upheavals in a country are never good for economics as most often, investors tend to pull out and redirect their resources to more stable environments.

The value of the currency also affects shares because a weak currency will drive sales down while a strong one will drive them up. This means that stock prices can rise or fall depending on where the dollar falls.

Investing in companies is always a good way to make more money and if you play your cards right, you could make a lot of it, but it is important to keep an eye out forthe prices by checking Lloyds share price or other trading companies to determine whether it is safe to invest or sell.

Author: Charlie Brown

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