Continuing Stock Market and Global Economic Volatility

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Global stock markets and economies have been suffering throughout 2015 with the drama continuing into 2016 for the slowest start experienced in recent years. Some of the causes and results include:

Slowing economic conditions in China have proven difficult to rebound from at least in the short term. Chinese consumers have tightened their spending habits reducing demand for everything from personal grooming products such as skin care and baby products to spending on hospitality in such markets as dining out and vacations. This impact is felt not only in the regional economy but also extends to US corporations with investments in Chinese markets such as those with name brand recognition such as Johnson & Johnson and Procter & Gamble.

Oil is a commodity on everyone’s watch list as supply continues to exceed demand in nearly every region of the globe. With China’s sagging economy demand has dropped in those markets, and in the US new methods of production have reduced reliance on foreign sources. While oil prices drop relieving consumers from high-priced gasoline, the positive impact is that more cash is available to spend on products such as clothing, automobiles, eating out, and travel. Expendable income can also be put to profitable use for investments.

Even long-standing performers such as Amazon and Xerox have struggled with performance and financial results. Investors responded in predictable ways: Amazon fourth quarter results triggered a slide of 13%, while Xerox announced a split into two new firms to focus on their markets more efficiently, raising share value by an excess of 5%.

Should Traders React to the Continuing Stock Market and Economic Volatility?

There are some definite signs of economic improvement in some regions and market sectors:

Job markets have improved in the US putting more of the previously unemployed back to work. Although this would be expected to produce an anticipated growth in GDP, 2015 results did not turn out that way. It’s important to note that many economists actually place more weight on unemployment reports than actual GDP results to evaluate overall economic conditions.

Businesses have been noticeably reducing inventories that had previously been building up in anticipation of higher sales than what they actually experienced during the fourth quarter of 2016. This right-sizing is seen as a positive sign by economists, and is also an impetus for consumers to make purchases at lower prices.

Leading investors such as Warren Buffet have consistently preached that markets will rebound from troubled times if investors ride out stormy weather. Losses in long-term investments only occur when investors panic and cash out while the share values are low.

Analysts are also predicting a pickup in the Chinese economy for the second half of 2016. China has recently removed their long-standing one-child policy which could have a positive impact on demand for baby products and other family-oriented items.

The US Dow Jones industrial average experienced a rally of some significance last week. The question for investors now is whether this is a short-term recovery or if the trend will continue. Japan is now also experimenting with an interest rate below zero in an attempt to restart their sluggish economy.

How do Day Traders Benefit from Stock Market and Economic Volatility?

Monitoring business results can trigger action by day traders. Analysts often predict results in advance that day traders can utilize to their strategic advantage. Merger and acquisition activities can also impact stock prices that may raise values of target companies so that you can take action in such scenarios. Keeping a watchful eye on business news and current events can play a huge part in day trader profits.

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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.

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