top of page

Indicator 9- Global News Analysis

Welcome to another article on advanced option trading strategies. In our previous article, we had discussed how local news is going to affect the stock market movement. Now, in this article, we are going to discuss how global news is going to affect the stock market movement.

So in this article, we can learn about international news for global motion and how it is going to impact the stock market and its movement. We're learning about indicators for the market moment. At least two or three indicators should be your favorite which will give you some truth that where the market is going to move. we will plan about Global News and how it is going to give you an idea.

First of all, let me tell you what is the meaning of global news. Markets across the world are noticing a lot of short-term volatility (consistently up and down in the stock market) mainly driven by news and events in the global markets. For example, news related to economic recession in America, soft and hard arrival and approximate of losses due to sub-prime crisis in the USA, increase in global commodities prices, changes in global crude oil prices, etc. These are some main reasons why global markets, especially the Indian stock market behave in a volatile manner based on growth in global markets.

Indian economy is increasingly uncovering to global markets post relaxation in the early 90s. We are witnessing fast economic growth in the last few years and as a result, we have seen large funds are coming into the Indian market from across the world. Most of these foreign funds are large powerful players and their activity in the market results in large volatility in Indian stock markets.

USA economy is the biggest economy in the world. A lot of small and large countries mainly depend on exporting to American markets for example country like China. As a result, analysts track the news related to the USA very similarly for example weekly USA employment numbers, the sub-prime crisis of the USA, interest rate movement and bond yield, etc. Whenever we see any negative news comes from the American markets it generates a tsunami in global markets especially in short term.

Indian economy is mainly operating by the domestic consumption, but post relaxation the share of Indian trade as part of global trade is growing in a very fast manner. India's economy has grown over USD 2.5 trillion and ranked as one of the largest economies in the world.

A large number of Indian companies are getting complicated in exporting their products to global markets, increasing funds by listing on a foreign stock exchange such as NYSE, London Stock exchange and NASDAQ, etc. The percentage revenue of Indian companies coming from foreign markets is increasing year over year. Therefore, share price movements of these companies are more likely to be affected by the growth in the world economy.

Investment decisions of the funds are operating and depend on the development/events in foreign markets, or their local markets. As a result, we are seeing our markets are getting more and more joined with movement in global, especially American stock markets. Market interpreters track and talk about these global events and global market movements very closely.

The beginning of the Indian economy also reduced-price dissimilar of a product or service that was present in the closed economy. For example, pre-relaxation, prices of commodities like petroleum products, airfare, steel, etc. were very much run by the government. The prices of these commodities are controlled by the global markets and hence are more likely to be forced by the development in the world economy. Similarly, there was a big price difference in the cost of service between India and other global markets. Slowly with time, this difference is also getting less.

As we had learned in our previous article that “Uncertainty is the only certainty in the world." This theme is most commonly applied to stock markets. As Indian markets have displayed in recent times, volatility makes stock markets very difficult to forecast. They also find that the global news point of view index explains more of the changes in global equity returns than other measures of volatility such as the Volatility Index, VIX, which captures market expectations of fluctuations in the stock market.

We have witnessed a lot of progress as a result of globalization and the opening up of our economy. A strong financial system and relatively less dependence over other demand for growth are some of India's key advantages. As a result, Indian markets are much better area than their counterparts in the rest of Asia area

Over the long-term period, optimistic global news attracts continuous inflows and has a stronger impact on returns. For this reason, the impact of global news sentiment is found to be three times bigger in global “bear" markets than in global “bull" markets, telling us that investors are more sensitive to the news tone during global market downturns.

They also find that media coverage varies accordingly with the change of the global news sentiment index. When the global news sentiment index is firmly positive, it is because the media cover more on positive financial and corporate news in advanced economies, especially in the USA. By opposite of this, when the index is negative, this is more a result of media reports of economic and political news in a growing market.

So, in conclusion, I would like to tell you that a global news country like the USA is going to affect the whole world. So, before investing in the stock market, read news related to the USA will be very helpful.

Recent Posts

See All
Post: Blog2_Post
bottom of page