How to read the financial pages

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7. Commentary on share price movements

We've seen how the financial press provides raw data on share price movements. Just as important is the commentary it provides on the markets which explain WHY prices have moved.

All daily newspapers provide commentary on market movements the previous day. The Markets page of The Times on 18th July, for instance, noted that:

• Vodafone Airtouch's shares had risen following two 'buy' recommendations from brokerage houses which were pleased with the company's move into the Spanish telecom market.
• The prices of other telecoms companies, C&W, Colt and BT, had benefited from the upbeat performance by Nasdaq the previous Friday.
• Allied Domecq shares dropped because of fears that it would overpay for Seagram's drinks business.
• Freeserve shares had rebounded on rumours of renewed bid interest from T-Online.
• The banking sector suffered as analysts predicted increased competition from internet banks.

What these commentaries illustrate is the wide range of factors that move share prices. Share prices are affected by:

• specific news about company performance (i.e. results)
• revisions in broker forecasts
• the sentiment that the market feels towards its industry
• results and announcements from competitors
• the performance of American markets
• takeover rumours
• exchange rates

Read these newspaper commentaries regularly, and you will quickly build up an understanding of how the professionals value shares.

1. What are the financial pages? 2. What to look for 3. Business news 4. Share prices in newspapers 5. Investment trust prices 6. Share prices on the internet and television 7. Commentary on share price movements 8. Anticipating company results 9. Finding company results 10. Interpreting company results 11. Takeovers and mergers 12. Indices 13. Sectors 14. Directors dealings 15. Unit trust information 16. Government bonds 17. Corporate bonds 18. Economic data - who needs it? 19. Key economic indicators 20. Conclusion

• How to Read the Financial Pages
• Eat The Rich