Impact of Macro Economics Factors in Share Market

The inflation rate is constantly changing every day. The entire investment community is always on the look out for what the future inflation rate may be. It has been proven that a healthy economy preforms best when inflation rate is

According to Channel Newsasia on 24th February 2016 in the report of “Malaysia January inflation rate rises, but rates seen on hold”, and proven again by lately news on 25th Macrch 2016 from The Star online “Higher food prices push February inflation above forecast”, both of the news are expecting the inflation rate of Malaysia will increase in 2016. We are adopting the news as our fundamental analysis to the futures trading to predict the effect of macroeconomic variable which is inflation that could affect the stock price movement in April. As we can read from the news, Malaysia's inflation rate rose at a faster-than-expected pace of 4.2% in Febraury from a year ago following higher food prices and a jump in alcoholic beverages and tobacco. Moreover, the Statistics Department also proposed that the Consumer Price Index (CPI) for February rose by 4.2% to 114.5 compared with 109.9 a year ago. Economists had forecast a 4.1% increase. As we know, CPI is proxy as inflation. CPI is the benchmark inflation and it uses a "basket of goods" approach that aims to compare a consistent base of products from year to year, focusing on products that are bought and used by consumers on a daily basis. The price of your milk, eggs, and daily essential are all captured in the CPI. So, based on our analysis that rely on news that release to the public from January to March, we should alert to the macroeconomic changes that could give a huge impact to KLCI price movement. Basically, the

The stock market prices and value vary day to day as a result of market forces. This means that stocks and shares prices change as result of supply and demand of goods and services. The stock market influences the financial decision making of companies. Therefore, it is important to follow said shares as well as others that might affect stocks of interest. Price vary accordingly with demand and supply, that is, if there is a higher demand then prices increases, whereas, if supply is higher than demand, stock prices decreases.

There are many people and businesses that are affected in an inflation. The first being people on a fixed income like the retired that are affected during an inflation because total wealth has lowered it takes more money to pay daily expenses due to lowered value of the dollar. The next group is the creditors, If they do not keep up with the rate of inflation that creditor could lose part or all profit from loans or other forms of debts. The last group is long term contractors, this is mainly due to that long term contracts do not take rates of lower inflations and could cost contractors profits gains due to lowered

As the inflation rate rises, I will have to redistribute my income. I would have to be stricter with my spending habits compared to an economy that has a low inflation rate. As the prices of everything around me starts to go up, I will have to be able to adjust my spending habits to make sure that my necessities are taking care of and that I am still able to spend more. By the inflation rates going up, this can have a negative impact on some manufacturers. As inflation goes up, I will not be the only person in the economy cutting back on unnecessary spending and be stricter with my money. A perfect example is when the price of gas took a significant increase during the mid-2000s. Car manufactures started to see that people were spending less on purchasing cars. Another reason why I will have to stricter with my money after a significant increase in inflation rates is the idea that I may be impacted by a pay cut or completely laid off.

Lenders will benefit from unanticipated inflation because they can rise interest and make more money. Bowers will benefit from anticipated inflation because they had time to plan.

Due to the turbulence of global economic crash, the high volatility appeared in Woolworth’s share price returns from January 2007 to June 2009, the return rate is floating widely. The most serious market crash happened on 9th September 2008 （－13.50％）. During this period of time, the investors had a difficult time. By contrast, there is a low volatility clustering from Jan-11 to Jun-11

Inflation occurs when an economic system experiences widespread price increases. Too much inflation is a bad thing because it means the dollar doesn’t have the same purchasing power it did. Costs of goods rise with inflation, but too much inflation too quickly prevents people from keeping up with the changes in cost. For those who don’t receive income increases quickly enough, inflation reduces the value of the goods those people can buy. For the currently employed, this means they need a salary raise just to keep up with inflation rates for meeting even fixed payments like rent or mortgages.

Yes, inflation is good for the economy for many reasons. One, Inflation is just pressure that keeps money moving through the system. To have a vibrant economy, you want money to constantly be in action rather than stagnating. Also, Another advantage is in fighting against a particular sort of cognitive bias:nobody likes their wages decreased. Lastly, if people are more actively buying and selling, it's probably easier to buy or sell whatever you need. This makes doing actual business easier.

Inflation and interest rates are often synonymous in the fact that one impacts the other. Interest rates in the United States are determined based on three variables; time value of money, reimbursement risk and power of inflation (What’s the Relationship Between Inflation and Interest Rates?, 2009). Essentially, the higher the inflation rate, the higher the interest rate. With inflation in the United States remaining low, bank interest rates will keep currencies at a constant with minimal fluctuation in value. This has both negative and positive effects on the economy. Borrowers (i.e. homebuyers, students needing loans, etc.) benefit from this; whereas the investors are not making what they did 20 years ago when interest rates were profitable (Appendix

The stock markets slowly rises as commodities rise. Also the inflation rate falls in order to reflect the situation of the market.

According to Mike Patton’s article in Forbes, he cites the “dethroning of cash, the falling of the global economy making US stocks more attractive, and the rising of intangible assets”. (Patton, The Coming Financial Bubble) Because the United States economy still reigns strong compared to other nations, stocks look attractive to investors looking for investments with substantial returns with relatively low risk. Patton also cites the lack of better alternatives for investments, which I also agree with. Bond investments have less appeal because of falling interest rates, globally, and within the US, leading the way for stock market investments to become the next bubble. After the recent ending of the house market bubble, stocks are starting to look more and more attractive to investors, and as new industries, such as social media, technology, and new sustainable energy, are rising and continue to attract investors, a new bubble will occur. This could have dire consequences, as the stock market is extremely important to the strength of the American

It provides data about product value changes in the Nation's economy to government, business, work, and private natives and is used by them as a guide for settling on monetary choices. Also, the President, Congress, and the Federal Reserve Board use CPI to help define financial situations and economic decisions. CPI can also escalate a particular dollar value with time and preserving buying power of a given dollar value. Examples of series adjusted by the CPI include retail sales, hourly and weekly wages, and components of the National Income and Product Accounts. So basically, as product prices increase, the purchasing power of the consumer's dollar declines. Inflationary problems occur when we experience unexpected inflation which is not unbalance with people’s incomes. If incomes do not increase along with the prices of goods, everyone’s purchasing power will be negatively affected, which can lead to a slower economy. While there are disadvantages to inflation, many economists states that we actually need it to keep our economy moving forward. A healthy rate of inflation will results in an increase of wages, profitability in businesses, and keeps the capital flowing. An ideal rate of inflation is approximately 2-3% per year. The goal is for inflation to outpace the growth of the underlying economy by a small amount per year. However, I believe that if one thing increase in price, everything else will also increase. For example, when minimum wage increase, the price of goods and services will eventually increase too. Which it will resulting in a decrease of demand, and an increase in

More generally, inflation can disrupt business planning. Budgeting becomes difficult because of the uncertainty created by rising inflation of both prices and costs - and this may reduce planned capital investment spending. Lower investment then has a detrimental effect on the economy’s long run growth potential

Financial stocks are the shares issued by financial industries. With the development of global economics, the volatility of global stocks market reflects the economic situation across a number of countries. As a result, each nation’s fluctuation of stocks plays a significant role in its own economy. Furthermore, the financial stocks that act as an important sector of the whole stock market are caused fluctuating by a large number of factors. Without exception, there is a great number of reasons for the volatility of Australian financial stocks, which cause the whole financial share market fluctuating unsteadily in Australia as well. The purpose of this report is to discover the most influential cause of financial stocks volatility in Australia. Moreover, This report will analyse three main factors: a combination of three financial instruments, legal framework and inancial industry fundamentals, which influence the volatility of Australian financial stocks.