Indices are generally either region-based or sector-based and serve as an excellent indicator of the prevailing market sentiment. The correlation between global economic events and the price patterns of major indices is a key understanding for traders who want to participate in the fascinating indices markets.

Some factors that can impact the price of an index include:

Political & Global news

Events such as wars, elections, natural disasters, or pandemics would impact an index market by affecting the country’s economy or companies' profit prospects.

Economic news

Economic events and meetings such as central bank rate decisions, non-farm payroll reports (NFPs), trade agreements, and employment indicators.

Index reshuffle

When a company's stock is added or removed from a stock index, the prices can see a shift.

Company news

The companies that make up the index: new leadership, a merger or release of financial results, or shifts in company policies, could affect the index as a whole.

Market sentiment

It refers to investors’ attitudes toward the current market performance. In other words, when the majority of investors speculate that a market is going to fall, they refer to it as a “bearish” market. The prevailing sentiment could, therefore, affect the indices market and the way they’re traded.