News Volume and Overall Risk Sentiment
The more the number of news releases in a day pertaining to an asset class, the greater the scope of market volatility. If we look at the Australian market, there are a number of factors that can lead to market volatility and changes in investor risk sentiment:
- Policy meetings of the Reserve Bank of Australia (RBA)
- US jobs report
- China’s economic data releases, including earnings reports of Chinese companies that import Australian commodities
- US fiscal stimulus measures for the Covid-19 crisis.
These reports and more could lead to volatility in the Australian stock market, the ASX 200 index and currency pairs including the Aussie dollar, such as the AUD/USD and AUD/NZD.
The reality is that high news volumes, associated with a particular asset, the greater the trading interest in that asset is likely to be. In fact, high new volumes can lead to higher market focus on the asset, leading to higher trading volumes. In addition, when there are multiple news sources discussing the same asset, the market sentiment can get coloured by fear or greed, leading to higher volatility.
But how do traders access so many reports, released on a daily basis, and then use them to understand their impact on asset price?
The Acuity News Volume Bar
The Acuity Sentiment Analysis tool is designed to ease the process of sourcing all relevant news for a particular asset. If you look at the middle section of the tool, you will see the “News Volume” section for the chosen asset class.