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How do interest rates affect the stock market

  1. Stock market values
  2. How does the interest rate affect the stock market?
  3. What factors affect the stock market?
  4. What is the market interest rate?
    1. Rendimiento de valores que ofrecen ganancias de capital
    2. Inflation data uses
    3. What is the minimum acceptable rate of return (MARR)?

Stock market values

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In a situation of high interest rates, the stock market loses its luster because the investor will prefer to go to these high rates and avoid the greater risks involved in the stock market. The opposite happens when interest rates are low, since without a return on money, the investor chooses to take on more risk so that his money does not lose purchasing power due to the rise in the cost of living (inflation).

The effects on companies are very clear. Low interest rates lower the cost of the new debt they issue. This allows them to increase their profits directly. When the bill for interest payments on their bonds, debentures, promissory notes or bank credit goes down, this money goes to the bottom line and pushes up share prices.

How does the interest rate affect the stock market?

Low interest rates lower the cost of the new debt they issue. This allows them to increase their profits directly. When the interest bill on their bonds, debentures, notes or bank credit goes down, that money goes to earnings and pushes up share prices.

What factors affect the stock market?

The state of the economy: stock prices can vary depending on how the economy of a country or region is performing. In this sense, the Gross Domestic Product (GDP) and interest rates are two of the indicators that affect stock prices.

What is the market interest rate?

The market rate for financial institutions means the average percentage cost of raising funds during a year, plus the percentage points that represent their operating costs.

Rendimiento de valores que ofrecen ganancias de capital

La inflación es la subida continuada de los precios de los bienes y servicios que consumimos durante un periodo de tiempo. Este aumento de precios repercute directamente en el poder adquisitivo de los ciudadanos y en la rentabilidad de sus ahorros. Veamos cómo se calcula la inflación y cómo afecta al consumo.

En España la inflación se mide por el Índice de Precios de Consumo (IPC). Una tasa que el Instituto Nacional de Estadística (INE) publica mensualmente y que mide la evolución del nivel de precios de los bienes y servicios de consumo adquiridos por los hogares españoles, tomando en consideración los precios de 479 artículos que componen una cesta de la compra estándar.

En la última década (de septiembre de 2009 a septiembre de 2019), el IPC ha variado un 12,9%, es decir, la inflación acumulada ha sido del 12,9%. Pongamos un ejemplo para explicarlo mejor: un producto que costaba 100 euros en 2009, ahora cuesta 112,9 euros. En los últimos años la inflación ha sido muy baja o incluso negativa, pero no siempre ha sido así. En los primeros años de democracia en España, cuando la peseta era la moneda española, los precios subían más de un 10% al año (con picos cercanos al 30% anual y un 128% acumulado en los años ochenta). Desde la introducción del euro en 2002, los precios en España han subido un 39,6%.

Inflation data uses

The ECB's interest in a high degree of financial market integration stems primarily from the need for monetary policy to be implemented and transmitted to the consumption and investment decisions of private agents in an efficient and homogeneous manner throughout the euro zone. Indeed, financial markets are an essential element in the monetary policy transmission process. Moreover, the money market is a vital element of this process, as it is there that monetary policy is implemented. It is clear that the implementation and transmission of the ECB's monetary policy depends on the efficiency and high degree of integration of the money market, but certainly also of other segments of the euro financial market.

But now let me return to the Eurosystem's interest in the process of financial market integration. Beyond the implementation of monetary policy, the second reason for interest lies in the other tasks entrusted to us by the Treaty. These include fostering the smooth functioning of payment systems and promoting the achievement of consistent national policies in the fields of banking supervision and financial stability. In this context, an efficient and well-integrated financial market is considered to contribute substantially to the strength of the entire financial system. To take just one of many possible examples, difficulties in cross-border securities trading, especially when used as collateral in monetary policy operations, can lead to strains in the smooth functioning of the market. A well-integrated securities market infrastructure, in which cross-border trading can be easily and safely conducted, helps to alleviate such strains.

What is the minimum acceptable rate of return (MARR)?

SymptomsHealthy gums are firm and fit snugly around the teeth. The color of healthy gums can vary. It can range from light pink in some people to dark pink and brown in others.

CausesIn most cases, the development of periodontitis begins with plaque. Plaque is a sticky coating composed mainly of bacteria. If left untreated, plaque can eventually lead to periodontitis as follows:

ComplicationsPeriodontitis can cause tooth loss. The bacteria that cause periodontitis can enter the bloodstream through the gum tissue, thereby possibly affecting other parts of the body. For example, periodontitis is linked to respiratory disease, rheumatoid arthritis, coronary artery disease, premature birth and low birth weight, and blood glucose control problems in diabetes.

PreventionThe best way to prevent periodontitis is to get into the habit of taking good care of your mouth and teeth. Start this routine at an early age and maintain it throughout your life.

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