3. Industry News
It is a very good idea for index traders to review industry news headlines regularly – for example, by reading up on technology news if one has invested in Google or Apple shares. News events regarding a specific sector can often lead to a knock-on effect on many companies in that same industry.
Supply and Demand
Shares prices are also driven by levels of supply and demand. When there are more shares available than there are in demand, each share of a company weakens. So, if a wealthy individual or large corporation owns a large percentage of a company’s shares and suddenly sells the lot, that company’s shares may well fall significantly in the near term.
Because many companies depend on the extraction or growth of commodities, reports of shortages or a surplus of a commodity can drive share price fluctuations. For example, a gold shortage is likely to affect many mining companies. A commodity which is in high demand, if there’s less of it available then its price is likely to increase, meaning that mining companies may be able to sell gold for higher prices, and so perform better financially.
Other headlines capable of influencing a company’s share price include company announcements of new strategies, new product releases or updates, competitor announcements, mergers and acquisitions, and financial news regarding changing economic circumstances in a country or region.