stock market

What caused the Wall Street Crash of 1929?

What caused the Wall Street Crash of 1929?

The 1929 stock market crash was a result of an unsustainable boom in share prices in the preceding years. The boom in share prices was caused by the irrational exuberance of investors, buying shares on the margin, and over-confidence in the sustainability of economic growth. Some economists argue the boom was also facilitated by ‘loose money’ with US interest rates kept low in the mid-1920s. These are some of the most significant economic factors behind the stock market crash of 1929. 1. Credit boomIn the 1920s, there…

Factors Affecting the Stock Market

Factors Affecting the Stock Market

Movements in the stock market can be quite volatile and sometimes movements in share prices can seem divorced from economic factors. However, there are certain underlying factors which have a strong influence on the movement of share prices and the stock market in general. Generally, shares will be in greater demand when investors have the prospect of earning more dividends. Therefore factors which make firms more profitable will tend to cause a rise in…

placeholder

Impact of Chinese stock market crash

In recent months, the Chinese stock market has been very volatile, with sharp drops in prices since last July. On August 24th, share prices fell 9% – one of the biggest single day falls. People fear this is the bursting of the Chinese stock market bubble which could have serious effects on the global economy. Possible effects of a Chinese stock market crash include 1. Reduced exports In recent years, China has seen a rise in consumer spending. Consumer spending has been growing at 10% a year. This is an important source…

Why is the stock market doing well when the economy is doing badly?

Why is the stock market doing well when the economy is doing badly?

Readers question: Why is the stock market peaking when the economy is doing badly? There is an old saying that the stock market has predicted 10 out of the last three recessions. Similarly, you could argue the stock market has been predicting several recent economic recoveries which haven’t really materialised.How to explain why  the stock market is doing well in the current recession?The stock market is always looking forward to the next one or two years. There is hope that the economy…