HOW DOES THE MARKET MOVE?
1. Supply and demand
Supply: It is the quantity of an asset that sellers are willing to sell at a given price.
Demand: It is the quantity of an asset that buyers are willing to buy at a given price.
Example: If there are more buyers than sellers for a specific asset (high demand and low supply), the price of the asset will tend to rise. Conversely, if there are more sellers than buyers (high supply and low demand), the price of the asset will tend to fall.
2. Economic factors
Economic indicators: Data such as gross domestic product (GDP), inflation rate, unemployment level, and retail sales can affect the market. For example, strong economic growth can increase the demand for stocks and corporate bonds, as companies tend to be more profitable.
Monetary policy: Central bank decisions, such as setting interest rates, have a significant impact. An increase in interest rates can make government bonds more attractive and cause investors to withdraw funds from other assets.
Example: If the central bank decides to lower interest rates, loans become cheaper. This can stimulate the economy and increase demand for goods and services, which in turn can cause stocks to rise.
