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УДК 033.336
Ermakova M. U. Student of 2 course, Faculty of Economics Omsk State University of F. M. Dostoevsky
Russia, Omsk Ермакова М.Ю. студент бакалавр, 2 курс ФГБОУ ВО «ОмГУ им. Ф. М.Достоевского»
Россия, г. Омск
FINANCIAL MARKET INDICATORS
In this work we consider the theoretical part of financial market indicators. This theme is very important for economy of our country. Market indicators are series of technical indicators used by trades to predict the direction of the major financial indexes.
Financial market, financial market indicator, index.
ИНДИКАТОРЫ ФИНАНСОВОГО РЫНКА В этой работе будет рассмотрена теоретическая часть индикаторов финансового рынка. Эта тема очень важна для экономики нашей страны. Индикаторы рынка это технические индикаторы, использующиеся в торгах для предсказания направления основных финансовых показателей. Финансовый рынок, финансовый индикатор, индекс. Contents: Introduction
1. The concept of financial market indicators
2. The role of financial indicators in the economy
3. Influence of financial market indicators on market precious of metals Conclusion
References
Introduction
The topic is called «Financial market indicators». This theme is very important for economy of our country. The financial market indicators help investors to avoid risks. Especially in more developed financial markets, the use of financial indicators has been integral to the well-functioning of markets. The financial market indicators show the movement of the economy. They are used by the most successful companies.
Financial indicators give us necessary information about financial market. Indicators give us information that we will not find ourselves. They give information of future economic growth, inflation, and financial market stability. The change in these data can also affect decisions about consumer spending, education loans and retirement plans. Financial markets are important in everyday life because making good business decision is difficult without understanding how key financial indicators behave.
Market indicators are series of technical indicators used by trades to predict the direction of the major financial indexes. Most market indicators are created by analyzing the number of companies that have reached new high level of development to the number of companies which demonstrate of their low level.
Financial market indicators are important both for investors and for ordinary people. In this work we consider such index as Dow Jones and S & P. We will also study the history of their appearance.
In my work I will study financial indicators on the example of, which is a market of precious metals.
Thus, we need to examine the basic theoretical issues relating to financial indicators, because the main purpose of this study is to identify the economic essence of indicators. We will achieve this goal if we perform three tasks:
1. Consider the concept of financial market indicators.
2. Identify the role of financial indicators in the economy.
3. Analyze the influence of financial market indicator on market precious metals.
The concept of financial market indicators
Indicators play a critical role in understanding what is happening in an economic system for a variety of reasons. If an economy is relatively transparent— if what is being reported actually did happen—at the most general level, we can observe what has just happened to the economy, and have more indications or proof as to what may happen next, an important factor when it comes to investing. But the assumption is that whatever investments we are tracking are in some way related or dependent on an economic indicator. Many money managers and investors react profoundly upon the release of some information, either by increasing positions in investments, selling positions in investments, or holding steady during the chaos created by the introduction of some indicative report.
When a report is released, it is naturally scrutinized and judged by all who read it. Some investment managers and individuals may review the same figures and draw completely different conclusions, based upon their own biases, trading
rules, theories, or bets. A great example is the Quit Rate, or how many people voluntarily give up their jobs. On the surface, an increase in this rate—issued by the Bureau of Labor Statistics, and analyzed by dozens of other organizations—may appear bad, as more people may become unemployed. But it may also indicate some type of economic turnaround is occurring, as people may have more confidence in the economy to leave a job voluntarily in order to find another job. Although there is only one number released, it may be interpreted in many different ways.
Managing your finances includes being aware of financial market conditions. While your portfolio of individual stocks or bonds will not perform exactly like the overall market, knowing what the overall market is doing can help you put your investments' results in perspective.
There are three key areas you should monitor:
1) Stocks
2) Interest rates
3) Inflation rates
Stocks market indicators:
The most often-quoted stock market indicator is the Dow Jones Industrial Average (DJIA). In the late 1800s, Charles Dow averaged the closing prices of 11 stocks considered to be representative of the U.S. economy and the DJIA was christened. Since then, the average has been expanded to include 30 familiar "blue chip" companies. Occasionally, the components are changed to make it more representative of the largest companies in the U.S. The calculation of the average is also changed to reflect stock splits.
Another common indicator that includes a larger number of companies is the S&P 500 index. This index includes the largest 500 companies and is weighted to reflect the market value of each company. It is more representative of the overall market, but still is comprised of only the large companies.
The National Association of Securities Dealers Automated Quotation system, or NASDAQ, lists over-the-counter market trades. The NASDAQ composite index tracks this market and is more representative of market conditions for smaller companies.
Inflation indicators. The consumer Price index (CPI) is the most widely watched measure of inflation. The government computes this index monthly by measuring changes in the prices of more than 90,000 items. The CPI is reported each month. The annual change is used for determining adjustments in Social Security payments, income tax brackets and many other payments and charges.
Monitoring the changes and trends of these indicators is a way to gain a general understanding of changes in the economy. Being aware of these indicators' changes and trends can help put your finances into a broader perspective and help you make better decisions about your saving, borrowing and investing.
The role of financial indicators in the economy
We start with the simplest financial indicator—commodity price. Various commodities (e.g., corn, gold, oil) are traded on commodity exchanges, much like the stock markets for individual stocks. If an airline wants to purchase 1,000 barrels
of oil today, it needs to pay the current price, which is called the spot price.1 However, if the airline company wants to purchase 1,000 barrels of crude oil for delivery next year, then it can sign a contract at a fixed price today for the oil it will buy next year; this price is called the futures price. If some event reduces the future supply of oil, which may increase the spot price at a certain time next year, the airline will pay only the locked-in price specified in the futures contract. Hence, this lower futures price reduces the oil expense for the airline. Futures prices are affected by various factors, such as the spot price, storage costs, and interest costs. The most common financial indexes refer to the prices of the stocks of publicly traded companies. For example, the stock price of Microsoft was $25.76 on December 12, 2011. Other than individual stock prices, an aggregate stock price index also plays an important role. For instance, the Standard and Poor's 500 (S&P 500) is a market value-weighted2 stock price index of 500 stocks chosen based on market size, liquidity, and industry. It covers various industries in the entire U.S. economy. If investors plan to allocate their funds to equity markets, they likely will pay attention to two factors: the prices of the stocks of individual companies and the prices across the broader stock market, as measured by indexes like the S&P 500. Stock prices generally increase or decrease as a result of changes in expected future earnings. If a company's new product launch is viewed positively by the market, the stock price of that company may rise. On the other hand, movements of aggregate stock indexes tend to signal changes in the state of the macroeconomy: Good economic news should increase the earnings of many companies. For instance, the S&P 500 may increase after better-than-expected job growth. Similarly, a sequence of bad economic news causes investors to lower their profit forecasts for firms. Thus, the S&P 500 is one of the most closely watched stock indexes because it incorporates new information about the future health of the economy. Just as stock price indexes cover equity markets, interest rates determined in the bond markets are also important.
Influence of financial market indicators on market of precious metals
When you use fundamental analysis of precious metals markets you are trying to establish the general state of the market, through past supply and demand statistics, and attempting to predict future physical flows of metal, to and from the market.
The major problem is that the only truly accurate statistics are too late for the event, and so you have to make an estimate or projection. In essence, therefore, given the number of known factors affecting supply and demand, you will only use fundamental analysis to prepare a broad-brush picture of the future statistical balance, for a particular metal.
The most difficult task of all is to predict changes in private investor sentiment for gold. As, although industrial uses absorb most new gold production, investor demand creates the swing factor that actually accounts for major price moves.
In addition to the basic supply and demand factors that fundamentalists analyse, monetary and general economic factors play a major role as well, in determining prices, especially in the case of gold. These factors influence the gold price.
Precious metals fundamental and technical analysis, for the personal investor, are indicators rather than investment strategy musts.
Conclusion
In this research work we considered the indicators of financial market. Analysis of the market of precious metals helped us to consider the main indicators and to understand their importance in the economy. On basis of our research we can state that:
1. We studied the history of indicators, and considered its importance in market analysis
2. We examine the role of financial market indicators. We realized that the indicators describe not only the state of the financial market. But also show the state of the economy today
3. We considered the indicators on the example of the precious metals market.
We guess that the research the indicators of precious market may help investors and government to avoid risks. We are convinced that with the help of indicators, we can see the state of the economy in any country. They give information of future economic growth, inflation, and financial market stability. We can predict the growth of the economy with the help of indicators.
We study that in addition to the basic supply and demand factors that fundamentalists analyse, monetary and general economic factors play a major role as well, in determining prices, especially in the case of gold. These factors influence the gold price.
Financial indicators give us necessary information about financial market. In this research work we examined the effect decisions about consumer spending, education loans and retirement plans. Thus, we fulfilled the main tasks and achieved the purpose of our research work.
In this research work we examined the effect decisions about consumer spending, education loans and retirement plans. Thus, we fulfilled the main tasks and achieved the purpose of our research work.
Reference:
1. Linpeng Zheng «What do financial market tell us? » Article from the site Federal Reserve Bank of St. Louis
2. Linpeng Zheng, «The economic information newsletter» www.liber8.stlouisfed.org
3. Peter Clark «Exchange Rates and Economic Fundamentals»
4. Mathias Moersch «Predicting Market Movers»
5. Kavin B. Murphy «The Franchise Investor's Handbook». Retrieved from
6. Lloyd Tomas «Forecasting inflation-Surveys versus other Forecasts»
7. Tom Mills «Statistical analysis of daily gold price data»
