Financial news can be a vital source of information for those interested in the stock market, economic trends, and global events. It can also be a source of frustration and confusion for those who don’t fully understand the complexities of the markets. Keeping up with financial news can help you accurately predict market movements and make informed decisions that can lead to long-term investment success.
FT’s Lex column is an agenda-setting feature of the Financial Times newspaper, with analyses and opinions on global economics and finance. It is believed that the name “Lex” stands for Laws of Trade, although it may have been derived from “Lex Mercatoria”, a Latin expression meaning “merchant law”.
An article in the Financial Times can trigger a significant increase in the volatility of a company’s shares. This is due to the anticipation of a newsworthy event, as shown in the graph below for RBS. This anticipation is evident in the options market, where an increase in implied volatility is reflected in higher option prices as investors seek to hedge against large movements in share price.
While there is speculation that the media can influence financial markets, it is difficult to demonstrate such a causal relationship. In addition, media coverage is driven by profit maximization and will highlight stories that it believes its readers are interested in. Moreover, the underlying economic events that trigger both the media’s coverage and the market’s reaction are often unobservable and complex.
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