Changes in ordinary commodity prices have an important impact on the stock market. Specifically, when prices rise, stock prices rise; when prices fall, stock prices also fall. Specific analysis of the impact of commodity prices on stock market prices is mainly manifested in four aspects:
1. When commodity prices increase slowly but not too much, and the price increase rate is greater than the increase rate of the borrowing interest rate, at this time, the price of the company's inventory of goods increases. Because the product price increases more than the increase in the borrowing cost, the company profits will rise, and stock prices will rise as a result.
2. Commodity prices have risen too much, and stock prices have not risen accordingly, but may fall instead. This is because rising prices have caused the company's production costs to rise, and the rising costs cannot be completely passed on through commodity sales, which reduces the company's profits and the stock price.
3. When prices are rising and commodity market transactions are prosperous, sometimes when stock prices are sinking, people are keen on spot consumption, which makes stock prices fall; when the commodity market rises and falls, it becomes the best time to invest in stocks. This caused the stock price to rise.
4. Prices continue to rise, which has increased investors’ awareness of value preservation, so that investors withdraw funds from the stock market and invest in movable or real estate, such as real estate, precious metals, and other items with strong value, which will reduce the demand for stocks. Thus, causing the stock price to fall.