Businessman checking the Australian shares price

Australian share prices, and the stock market, are significantly influenced by external factors. These factors can sway the stock market so much, that it could affect your portfolio and cause you to make or lose money. There are a huge number of factors that can influence Australian share prices, and can include supply and demand, the bank rate, global events, foreign investment, government stability and so on. These only just scratch the surface, and are a good indicator that external factors can sway the stock market in a major way. For these reasons, there are no clear and concise ways to undoubtedly predict the stock market, but there are ways to pick up on indications of movements. It is important to know what can sway the stock market, as that way you can pick up on when the stock market may move up or down. With this information, you can make informed strategic decisions on whether to buy or sell, and what to change about your portfolio.

Here are some factors that can affect Australian shares prices.

Global events/news

This is a rather broad term, but global events/news definitely do affect Australian share prices significantly. Global events could range from anything such as a company undergoing a scandal, country politics, conflicts arising, new technological or scientific breakthroughs and so on. It is obvious that many of these would affect Australian share prices, as companies would be seen as having more value than others due to certain events, or vice versa. For example, the current conflict in Ukraine has significantly affect the stock market. Russian companies have been affected negatively as a result of the conflict, and the Russian stock market has decided not to open for weeks now. The economic effects of conflict and subsequent sanctions can definitely affect the rest of the world, and is a good example of how global events can affect everyone.

Market sentiment

The psychology behind the participants within the stock market can influence Australian share prices. This has often been long studied, as many people who invest can be stuck on pieces of news which will keep Australian share prices inflated or decreased, albeit artificially. Understanding where and when market investors are coming from, and how they view current events can help to influence your investment decisions. It can also influence Australian share prices, and you must understand this to make money in these types of situations. In fact, it is so important that many people dedicate their studies to ‘behavioural finance’, which studies the psychology behind finance.

Industrial relations

Industrial relations can greatly affect the stock market and Australian share prices. For example, if workers in the rail industry decide to strike, the Australian share prices associated with this may decrease in value. Because of this, it is important to stay up to date with any industrial action that may be occurring in your region of the world. Poor industrial relations can affect the stock market greatly, as it affects the performance of the company and its workers. With a decreased output in work, the company will lose value and this will be reflected in the stock market.

The verdict

There are many more different factors that can influence Australian share prices. Different types of investors will look at different factors, and use them to influence their decision-making when investing. These factors may be out of your control, but it is important to stay up to date on them and to understand them in order to have a viable portfolio which will make you money.

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