Global stock exchanges have caught a very unstable economic environment lately, with the attention now very much centered on the trade war between the United States and China over the islands in the South Pacific. However, global indexes also have caught a storm, as government elections around the world seem to be getting closer to election day. In this regard, one of the most important issues that need to be considered is how to track the various political events as they unfold. Here are some ideas on how you can track political developments around the world using stock indexes:
India China Situation Global stock indexes have actually been affected by the Indian government’s decision to open up its economy to more international investment. Although China itself has been struggling with issues related to its slowing economy, India has seen a major rise in consumer spending after three years of recession. Moreover, a large number of Indians have already taken advantage of the newly opened-up services, which have increased consumer confidence in the Indian market. This is likely to continue as new and smaller Indian start up companies continue to surge on the global market.
CFDs Trading Markets The move by CFDs trading indices such as the FTSE100 and the ACM indices has brought about a significant turn in the trading hours in the UK. In fact, many investment firms in London started to use CFDs as part of their hedging portfolio. As the rates at which CFDs are traded remain very low compared to the traditional European and American markets, this form of trading still proves to be quite profitable for traders. Furthermore, traders looking to cash in on the turbulence in financial markets around the world will find that these kinds of investment vehicles offer the perfect platform for trading.
Political Issues Investing in U.S. stocks has been hit by political issues surrounding the U.S. stock market. This has seen a sudden rise in investors switching over to the Indian markets. Although political issues do affect the performance of global stock indexes, this phenomenon does not seem to affect the quality and reliability of the data available from the Indian markets. The volatility caused by the current Indian government’s decision to nullify the historic 2021 constitutional amendment process and push through a new constitution may have had a negative impact on Indian shares, but investors have remained calm and have remained wary of any political implications.
Barometer Points The movement of the global stock averages and the retracement tendencies observed during the first week of this March 1997 was remarkable. A combination of events resulted in sharp declines in the market value. At the time, many Indian investors were excited by the prospect of more foreign direct investment (FDI) flowing into their country via this period. However, the sudden fall during the second week of march saw the market values bounce back towards the opening levels and this was an indication of Barometers points for future market activity.
Trends During this period there were repeated signs of retracement in global stock indexes. The two biggest indicators used to gauge the replacement trends in Indian stocks were the Stochastic and the RSI indices. Both these trends were bearish at the beginning of the second week of march, but reversed roles by the end of the second week. This indicated a clear pattern of investor sentiment in favour of the bearish direction in stocks. This would imply that traders were buying stocks as the bear markets became entrenched during the second week of March.
Economic Factors The economic data released by the U.S. Federal Reserve showed that the economy had experienced a mild recovery after being hit by the severe recession. This helped the dollar recover against most of the major currencies including the Japanese yen, Swiss franc and Euro. This helped push the Stochastic and the RSI indices to record high levels. This would indicate that trading movements were related to the direction of the US economy.
Executive branch appointments were announced at the start of March. Candidates who have been confirmed to have included three former cabinet members, four current cabinet members and a new governor of the Bank of America. Changes in political party coalitions have also had an impact on the direction of stock indexes trading hours. The British government has also reshuffled its cabinet recently, with David Cameron has to appoint more Euroskeptics and more hawkish members of his party to key portfolios. All these factors have had a negative impact on trading stocks in Europe.