The Different Market Influences

marketThe fluctuations in stock prices and the commodity and currency prices all depend on the demand in the market. When the demand for a particular product or commodity is high, the price for the same is bound to rise. On the other hand, when there is a declining demand that will cause a drop in the prices till the sellers are able to sell the product. The demand is thus governed by many factors which cause the business decisions to be taken accordingly by buyer and sellers.

The earning factor is what rules the stock market. The stocks of a company usually reflect the earnings of the company over a period of time and are bound to increase as more investors opt to take up its shares. When it comes to commodities like wheat or corn, they are usually in limited supply and the price is determined by their availability. Currency values of the different countries are also dependent on the interest rate policies of the particular nation. When the interest rates are high, the currency goes up while the falling interest rates cause the currency value to drop. When the New Zealand dollar is increasing while the US dollar decreases, the currency pair or the ratio of NZD/USD will rise as long as the New Zealand dollar gains.

The interest rate can be defined as the price at which the government is ready to borrow money from investors. When the latter is high the bonds you buy will pay a higher dividend and that will lead to more gain. When Germany has a high interest rate the investors will be driven to put their money in bonds as that will lead to higher gains. For doing this more Euros have to be purchased for which USD has to be sold in order to gain more Euros. That will lead to a rise in the valuation of Euros and the USD will fall. Economic conditions of a nation are predicted from the behavior of the stock market and an economy that is doing well will have financial markets on the rise.