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Understanding the Financial Pages

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Looking at the financial pages of the daily newspaper or website may seem like a bewildering onslaught of information with reams of market statistics and measurements. This can make the investment world seem quite complex and intimidating, but when you break it down and try to grasp each of the component parts, it is well within the capacity of most people to understand.

Here are a few tips that may help to get you started:

Firstly, a word of warning

It is easy to get caught up in habit of tracking daily movements of particular share values, but this can distract you from taking the broad, long term view that is so essential to successful investing. In short, don’t be tempted to try and ‘pick winners’.

Understanding the ASX table

The financial section will normally show the full list of companies listed on the Australian Stock Exchange (ASX). Next to each company will be a range of figures, usually beginning with the price of the share for that company at the end of the previous day’s trading. Some publications will also show a three letter ‘ASX code’ used to identify the company.

Other measurements shown on this table include:

Weekly volume – The total number of shares of a company that were bought and sold within the last week.

Price movements – This may be shown as the price change since the previous day’s closing price, or it may be shown as a change over the previous week and some financial tables will even show the change over the last 12 months.

Dividend yield percentage – This figure is sometimes also shown and is the amount a company pays out in dividends each year as a percentage of the current share price. For example, if a particular share has a value of $100 and has paid a dividend of $5 then its dividend yield is 5% ($5 divided by $100).

Market indices

While the ASX table breaks down the performance of each company separately, you can also look at the collective performance of the market as a whole via the ‘All Ordinaries Index’. This tracks the movement of the total value of all shares on the exchange and the change over the last week and month may also be shown.

Apart from the All Ordinaries Index, there are also a range of other sub-indices which indicate the performance of different segments of the market. The ASX 200, for example, is an index that tracks the change in collective value of the largest 200 public companies.

Some indices focus on specific industrial segments. The S&P ASX200 Energy Index, for example, measures the largest 200 energy companies. There are indices for and range of other sectors, such as health care, industry, finance and metals and mining.

International markets

Financial pages will also usually show various indices for major stock markets in other countries, such as the Dow Jones index in the USA, the FTSE in the UK and the Hang Seng in China.

Commodity prices

The prices and price changes of key commodities are also a feature of many financial pages. Oil and gold are two such commodities that will usually be shown because of their importance as indicators of the general direction of the world economy and of market sentiment.

Exchange rates

These are another important indicator of economic conditions and the state of the economies of different countries relative to each other. The financial pages will usually show the daily movement of the Australian Dollar against major world currencies, such as the US Dollar, the Euro and the Yen.

There can be many factors within each country’s domestic economy which influence the movements in exchange rates. These can include interest rates, inflation, political stability, government debt and terms of trade.

Making sense of it all

It would obviously take quite some time if you were to review and analyse all the items being reported and measured on the daily financial pages. Even if you do have the time to do that, it takes a considerable amount of skill and experience to interpret what different movements mean.

Often the day to day movements in things like share prices and exchange rates are the result of transient factors and it is only a consistent analysis over a long period of time that can start to make a coherent interpretation.

While it can be interesting to follow the fluctuating fortunes of particular shares, or the daily machinations of indices, commodities and exchange rates, it helps to have a financial planner on your side to look at the bigger, long-term picture.

They will have access to expert research resources that constantly analyse markets at home and abroad and can position you to grow wealth without the need to personally keep track of day-to-day changes.

Take the next step

To discuss your financial situation, make an appointment with a Bridges financial planner.

We have an established alliance with Bridges, to provide our customers with financial advice. Bridges has been helping Australians with financial advice for 30 years.

A Bridges financial planner will develop a plan specifically for you; one that’s tailored to your needs and circumstances to help you achieve your goals.

To make an appointment with a Bridges financial planner, call 02 9859 0585. The initial consultation is complimentary and obligation free.

Enquire Call 02 9859 0585

Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837.
This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent.
Examples are illustrative only and are subject to the assumptions and qualifications disclosed.
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In referring customers to Bridges, Laboratories Credit Union Ltd does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives