As any investor knows, the world news plays a big role in the financial markets. Watching just the money and business pages can cause you to misstep in numerous ways. The way political news, world news, and financial news interact for a combined effect on trading conditions is often overlooked but it should not be.
The finance and investing analysis often is filled with numbers from the various government agencies around the world that detail the latest updates to the consumer price index, consumer confidence, inflation rates, and interest rates to name but a few and these numbers are used to make predictions on how a market will react. While this is a good starting point, analysis that does not include political and world news is missing out on a huge component of forecasting. It is failing to take into consideration two major factors-
While there are many places available to get expert analysis of the stock, commodities, and foreign currency markets, placing excessive faith in any of them that list nothing but ticker tape numbers in forming their opinions would be a mistake. It should be clear that these sources are simply providing a piece of the puzzle. As another example, the announcement this week that unemployment numbers had remained the same in Europe marking true stability in labor and unemployment for the first time in several years had far less effect on the European Exchanges than the announcement from the UK news that its parliament had voted against direct military action in Syria. While the unemployment numbers and actual drop in unemployment could have been expected to send markets higher, the continued unrest about what the US response will be has left markets flat and in a wait and see attitude across the long weekend in the US.
When you are researching for the purpose of investing, using all available sources that could be expected to have an effect on the day’s trading is prudent, as well as checking several sources. While time constraints make it near impossible for the individual investor to watch multiple news shows and read multiple newspapers each day, they certainly can ensure one or more of the sources includes the influence of the global political news on technical analysis.