The People's Daily commented that "the stock market is a barometer of the economy." How do you understand this sentence?

The performance of the stock market is often an expectation of investors for the growth of the real economy, which is often ahead of the real economy; while the bond market is often negatively correlated with the stock market. Therefore, the stock market is called a red macroeconomic barometer.

Generally speaking, when talking about macroeconomics, the national economic situation comes to mind. When investors conduct macro analysis of stocks, they need to analyze the economic background relationships from these aspects. So what impact does stock macroeconomics have on the stock market?

What does stock macroeconomic variable analysis mean? Macroeconomic aggregates are the sum of individual quantities. For example, total consumption refers to the sum of consumption of each consumer. It may also be the average quantity of a quantity. For example, the price level is the average price of various commodities. The main macroeconomic variables include gross national product, gross domestic product, consumption, investment, money stock, government budget, inflation rate, interest rate and exchange rate, etc. Use these common indicators to show the characteristics of economic activity.

Business Cycle

The business cycle consists of four stages: recession, crisis, recovery and prosperity. Generally speaking, during a recession, stock prices gradually decline. During the crisis, stock prices hit their lowest point; when the economy begins to recover, stock prices will gradually rise again. During boom times, stock prices rise to their highest point. Usually, no matter what stage of the economic cycle, changes in stock prices are always one step ahead of changes in the actual economic cycle.

Inflation level

Inflation is an important macroeconomic factor that affects the stock market and stock prices. Generally speaking, money supply is directly proportional to stock prices, that is, an increase in money supply causes stock prices to rise, while a decrease in money supply causes stock prices to fall, but under special circumstances it has the opposite effect.

Changes in interest rates

Among financial factors, changes in interest rate levels have the most direct and rapid impact on the stock market. Generally negatively related to interest rates. Typically, when interest rates fall, stock prices rise. When interest rates rise, stock prices fall.

Price Factors

Under normal circumstances, there is a positive correlation between price changes and stock prices: that is, when prices rise, stock prices rise; as prices fall, stock prices also fall. .

Economic Indicators

According to various economic indicators and prosperity policy signals released by relevant government departments, investors can analyze whether economic growth is trending downward.