The world’s financial markets have undergone significant changes in the past several decades. These changes have been largely driven by technological developments. Advances in telecommunications have increased the speed at which information can be processed and spread. A multitude of new financial instruments have also been developed to manage risk. Banks and nonbank financial institutions alike now have many more ways to raise money than ever before.
Many people use financial markets as an investment vehicle to make a profit. Purchasing shares allows individuals to earn more than they would with a savings account, but the risks are high and the value of investments can go down. There are no guarantees that a good return will be realized in the future, but financial markets allow people to buy insurance. Insurance companies also use financial markets to ensure that payouts are made to insured parties.
Financial markets are undergoing tremendous changes, and the easing of capital controls has spurred competition among financial institutions and non-financial institutions. Increasingly, institutional investors are shifting their savings from one country to another in search of higher returns, and professional money managers are making the transition to foreign markets.
Today’s investors are weighing a plethora of economic and earnings reports, including the latest housing report. Although the housing data was the focus today, a positive earnings surprise from Netflix and Proctor & Gamble topped expectations and noted the positive trends in the market since the summer. Gold and crude oil also saw gains.