Like any ecosystem, the world economy is deeply interconnected, and while America remains the largest single economy in the world, it’s the biggest fish in a pond with some pretty big fellow swimmers, and news from Europe and Asia most definitely affects the United States, just as the American market can dictate ups or downs for foreign affairs. For proof of this, look no further than the Greek crisis of 2011, with Standard & Poor’s 500-stock index dropping 18.6% in one year over concerns about Greece. Meanwhile, China’s potential slowdown could send American markets crashing like it’s 1929. With all this in mind, we should take a look at the business situations overseas and how they might influence American stocks.
Signs are the Same Everywhere
Financial experts and strategists pay attention to the same factors for foreign as for American markets, including GDP and the purchasing managers index that measures the health of manufacturing and services. So the good news is, according to these metrics Europe is in the process of stabilizing after the Brexit vote, a boon especially to companies that export to European destinations and are hoping their products don’t fall by the wayside.
It also bears watching major market indexes like Germany’s ZEW Indicator of Economic Sentiment, Japan’s Nikkei, or China’s Shanghai Composite, a good way of anticipating problems both at home and abroad.
Monetary Policy: the Changing of the Guard
Foreign fiscal policy can have a serious impact on domestic fiscal reality. Japan, China, and the United Kingdom all have relatively new leaders, and paying attention to how those leaders and their appointees set policy, as this will indicate their country’s direction moving forward and mean appropriate feedback on this side of the pond.
When anticipating the impact of foreign economies or preparing to invest in foreign firms, companies should retain the services of a financial printing firm for easy access to automated publishing, mutual fund publishing, content management, and more. Printing firms remain abreast of the latest trends in mergers & acquisitions and IPO publishing, and employ experts in XBRL and SEC filings to help report any acquisitions or divestitures at the end of the fiscal year.
As a new chairman takes over the Securities and Exchange Commission, how will the agency’s priorities change?
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