Finance

TRADING THE NEWS: IMPORTANT RELEASES TO FOLLOW

If you go and look at an economic calendar, you may see marks on recurring news items. Most of the times, these items have heavy influence on the market. When trading the news, it’s best to pay careful attention to the following releases.

Federal Reserve Announcements

When it comes to market-moving news releases, headlines from the US Federal Reserve top the list. Arguably the most important announcements from them have something to do with interest rate hikes/cuts.

The Fed’s decisions over interest rates are not only important to stock traders, but also to all kinds of investors. It’s not only important to investors inside the United States, but also to investors in Europe, Asia, and other parts of the world.

That’s because the US is the biggest economic powerhouse in the world. If the Fed’s decision signifies any weakening or strengthening in the US economy, other countries typically calibrate their decisions to the Fed’s move.

Employment Data

The US jobs report is another very important news release that an investor should follow. Traders and investors closely watch employment levels.

That’s because the jobs data has tremendous influence on consumer confidence and spending. Consumer confidence and spending, in turn, accounts for about 70% of the US economy.

Employment figures that beat economists’ estimates are generally indicators of a healthy US economy. Meanwhile, figures that miss or fail to reach these forecasts generally indicate a faltering economy.

Since you already know how the market would react to such and such figures, you will be able to place your positions and trades strategically, accounting for other factors as well.

Earnings Reports from Companies

A company’s earnings report tells a lot more than numbers and figures. For traders, it’s wise to have a strategy set up ahead of the actual release of the earnings report.

That’s because a company’s stock can bounce around in a much wider range post-earnings. That’s much wider than those seen in an index.

For some trader, trading the news of earnings reports may not be necessary. However, if you have a fairly large position in a stock, either long or short, scrutinizing the possible outcomes of the company’s earnings report may be extremely necessary.

You have then to decide whether it’s better to leave your position as it is or change it according to expectations. Here are some things you may want to consider:

  • Investor sentiment for stock’s sector
  • Current mood of the broader market. That is, whether it’s bullish or bearish
  • The level of short interest in the stock
  • Valuations for the stock
  • Earnings expectations
  • Earnings and outlook given by competitors
  • Historical price performance

Political and Geopolitical News

These types of news generally are one-off items. However, they are extremely serious business.

However, while you may want to secure your investment capital, always see whether you are committing a kneejerk reaction. 

Keep in mind that the US financial markets have historically endured severa terrorist attacks and wars, showing extreme resilience and strength.

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