Understanding Fundamental Analysis
Fundamental analysis is a methodology used to assess the intrinsic value of an asset. It is an approach of examining the underlying economic, financial, and other qualitative and quantitative data to predict future market trends. For indices, the fundamentals include economic indicators that give an idea of the health of the economy, such as the Gross Domestic Product (GDP), inflation rate, and unemployment rate.
Factors Affecting Indices
Indices are affected by several factors, including geopolitical events, interest rates, and economic performance. Economic data announcements can have a significant impact on indices and, as such, should be closely monitored, including central banks’ decisions on interest rates. Geopolitical events, such as wars, elections, and natural disasters, can also cause a shift in the market’s direction. These factors are necessary to consider in the process of conducting fundamental analysis of an index. Discover more about the topic in this carefully selected external resource for you. trading analysis!
Key Indicators to Follow
When conducting fundamental analysis for indices, it is essential to know the critical indicators and factors to consider. They include: