To do well in stocks, we must master some knowledge about the stock market. Let the financial manager tell you how interest rates affect stock prices?

Share prices are affected by many factors, including interest rates. The impact of interest rates on stock prices generally moves in the opposite direction, that is, when interest rates rise, stock prices fall, and when interest rates fall, stock prices rise. The specific reasons are as follows.

1. Although stocks are currently one of the most important ways for companies to raise funds, bank loans are sometimes more important. After all, stocks are bought according to the wishes of shareholders. This way of raising funds does not have the advantages of banks. Loans are stable and sometimes not as fast as bank loans. Once interest rates rise, it will inevitably increase the company's loan costs, and sometimes it will be difficult for companies to obtain corresponding funds. In this case, the company has to reduce the size of the company to survive, resulting in an overall decline in profits and a subsequent decline in stock prices. Otherwise, the stock price will rise.

2. When interest rates rise, the discount rate used by investors to evaluate stock prices will also rise, and the value of stocks will decline. Then the stock market trading price will also fall.

3. For investors, the rise in deposit interest rates will inevitably cause some investors who invest in the stock market to turn to bank deposits, an investment method with relatively stable returns. This causes subtle changes in the supply and demand relationship of stocks, which will affect the stock price to some extent and cause the stock price to fall.

Since interest rates affect stock prices, investors who want to have a deeper understanding of the financial market can also study the factors that affect interest rates to predict whether interest rates will rise or fall. Here's a look at some of the factors surrounding interest rate changes.

1. Changes in loan interest rates. Banks' loan funds mainly come from deposit funds. If loan interest rates fall, deposit interest rates will also decrease accordingly.

2. The overall trend of the market. If the market is quite prosperous, with frequent buying and selling and rising prices, the country is likely to raise interest rates, causing residents to deposit their spare funds in banks to achieve the purpose of controlling prices. This is also one of the means of national macro-control.

3. Today’s market economy is already a global market economy. For example, the U.S. economy still has a great impact on the global economy. Therefore, the adjustment of international financial interest rates will definitely affect the corresponding changes in my country's financial interest rates.

Although the impact of interest rates on stock prices appears to be very weak, sometimes ordinary investors cannot discover how it affects stock prices at all. However, since we are involved in stock market transactions, if we want to obtain as much benefit as possible, only by comprehensively analyzing every factor of the stock price can we do this: win the stock market and win the future.

Okay, how do interest rates affect stock prices? That’s all the introduction, everyone should understand it. If you want to learn investment and financial management, you must master the above skills. For more investment information, everyone is welcome to follow us!