Lauren Hua

How do futures influence the stock market?

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Futures markets are often used as a predictive tool for the stock market because they reflect investor sentiment about where prices are headed in the near future. Here’s how that works: What Are Futures? Futures are contracts to buy or sell an asset at a future date for a predetermined price. They trade almost 24/7, even when the regular stock market is closed. Why They’re Seen as Predictive Trading Outside Market Hours: Futures keep trading when the stock market is …

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Why don’t stock markets like uncertainty?

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Stock markets don’t like uncertainty as it can lead to irrational behaviour among investors, which disrupts the normal functioning of the market. Here’s why uncertainty negatively impacts stock markets: Unpredictability: When there is uncertainty—whether it’s due to political instability, unclear economic policies, or unexpected events—investors struggle to make informed decisions. They rely on trends and data to predict future market movements, and uncertainty makes those predictions unreliable. Increased volatility: Uncertainty leads to greater volatility, meaning prices fluctuate wildly. Investors tend …

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What causes a currency devaluation?

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Currency devaluation occurs when a country’s currency loses value relative to other currencies. This can happen for several reasons, including: Inflation: When a country experiences high inflation, the purchasing power of its currency decreases, which often leads to devaluation. If inflation is higher in one country compared to others, its currency tends to lose value on the global market. Interest Rates: If a country lowers its interest rates, it may cause its currency to lose value. Lower interest rates tend …

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Why is gold popular in volatile markets

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Gold is particularly popular in volatile markets due to its historical role as a safe-haven asset, as well as several key qualities that make it resilient during times of economic uncertainty, market swings, or financial crises. Here’s why gold tends to shine during volatile market conditions: 1. Store of Value What it means: Gold has been recognized as a store of value for thousands of years. Unlike paper currencies or other assets that can be devalued through inflation, currency debasement, …

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Why does the U.S. share market influence the Australian share market?

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The U.S. share market has a significant influence on the Australian share market for several reasons: 1.Global Economic Integration The U.S. is the world’s largest economy, and its financial markets are deeply integrated with the global economy. Since Australia is a small, open economy, its financial markets are highly sensitive to movements in major global indices, especially the U.S. stock market. When the U.S. market moves, it often signals broader trends in global economic conditions, which can affect Australian companies …

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