What Factors Influence the Australian Share Prices?
Share prices are constantly rising and falling. When these prices rise, it means there are more buyers than there are sellers. The vice versa is true when the prices fall. However, a lot happens for there to be more buyers and sellers.
Many factors affect the rise and fall of the Australian shares price. Some of these factors are related to the companies, whereas others are more general market influences. Read on to find out what happens to the share market.
9 Factors Influencing the Australian Share Prices
Demand and Supply
As mentioned, buyers and sellers affect the rise and fall of share prices. It means that the demand and supply of securities play a huge role in influencing the Australian share prices. Demand, in this case, refers to the buyers and supply refers to the sellers. So, if there are more buyers on the market, the prices increase. Conversely, the share prices fall if there are more sellers than buyers.
Another factor that influences the Australian share prices is the market players. Bulls and bears signify the different types of market players. So, the securities prices increase when there are more bulls than bears. Where the bears are more than the bulls, the share prices experience a drastic drop.
When a bank offers a lower interest rate, more people will demand funds, thus increasing the demand for Australian share prices. On the other hand, a bank with a higher interest rate doesn’t attract demand for funds. In this case, the share prices decline.
The success of companies is determined by the management profile. Therefore, the management profile has a hand in whether the share prices rise or fall. Management with educated and skilled personnel showing a progressive track record plays a huge role in increasing the share prices. When the company is handed over to management with an unskilled and bad reputation, the Australian share prices would decline.
Announcement of Dividends
Any investor in Australia knows how crucial dividends are in the share price movement. As such, announcing the dividends plays a big part in the Australian share prices. Companies announcing dividends tend to have a higher share price than those that don’t. However, if the dividend rate announced is lower than the expectations of the investors, the share prices would fall. An upward rate causes the share prices to increase.
Economic activity also plays a role in determining the rise and fall of the Australian share market. Repeated fluxes in economic activity is referred to as a trade cycle. Therefore, when the market conditions are flourishing, the share prices increase. The vice versa is true when the market experiences a depression. And during the recovery period, the prices of securities steadily increase and fall during the market recession.
When the management of a company establishes good relationships with its workers, the productivity increases, thus better proceeds. In this case, the Australian share prices increase. Conversely, when the Australian company experiences constant strikes and lockouts, it means the industrial relations are not good. Therefore, the share prices become low.
The stability of a country is determined by the government. So, entrepreneurs confidently invest in new and existing ventures when the government is stable. Sales and incomes increase leading to a rise in share prices. No new investments are made when a country experiences the slightest instability in the government. It is the low production and profit rates that cause securities prices to decline.
Investors confidently invest in the stock market that runs openly with effective regulation. It means that there will be more buying, hence an increase in the share prices. Conversely, when the market experiences ineffective regulation, investors may lose their confidence in the market, thus selling off their shares. In this case, the share prices drop.