KUALA LUMPUR, MALAYSIA – Media OutReach Newswire – 9 March 2025 – As we progress through 2025, global markets are grappling with a phase of economic uncertainty. Factors such as potential inflationary pressures from trade tariffs, shifting central bank policies, and geopolitical risks are shaping trading conditions. In this complex environment, traders who integrate fundamental analysis into their strategies can navigate uncertainties more effectively, positioning themselves ahead of major market movements. Kar Yong Ang, a financial market analyst at Octa Broker, shares insights on how traders can leverage fundamental analysis to anticipate market shifts and capitalize on economic developments.
Understanding Fundamental Analysis
Fundamental analysis is a method of evaluating how political and macroeconomic factors can influence the future price of an asset. Traders typically assess geopolitical events, economic releases, and industry trends. This analysis incorporates both macroeconomic and microeconomic statistics, including Gross Domestic Product (GDP), employment data, and corporate profits. For instance, the German economic slowdown in 2024, driven by rising energy prices and declining industrial output, resulted in a reduced growth forecast of just 0.3% for 2025, significantly impacting German equities and investor sentiment.
Government policies and central bank actions play a crucial role in shaping market sentiment. In 2025, new U.S. tariffs on Chinese imports heightened concerns of stagflation, leading to a surge in gold prices while weakening risk-sensitive currencies. Kar Yong Ang notes, “In February 2025, President Trump imposed a 25% tariff on imports of steel and aluminum, effective March 12. While aimed at protecting domestic industries, this policy raised inflation concerns and threatened economic growth.” The market’s response was swift, with steel prices soaring over 30% since Trump’s inauguration, and the S&P Global Flash U.S. Composite PMI Output Index dropping to its lowest level in 17 months.
Fundamental vs. Technical Analysis
While technical analysis focuses on price charts and trends, fundamental analysis considers broader economic and corporate financial factors to predict an asset’s value. Blending both methods enhances decision-making. Relying solely on technical analysis may lead traders to overlook external factors that can drive price fluctuations, regardless of indicator-based insights. By conducting both analyses, traders can gather more information to support their trading assumptions or identify emerging facts that contradict their hypotheses, reducing the risk of hasty decisions.
Client-focused brokers often integrate both fundamental and technical analysis capabilities into their trading platforms. For example, Octa Broker’s proprietary platform, OctaTrader, features “Space,” a feed of expert-curated insights embedded within the app. This tool provides relevant and timely trading ideas based on both analyses, allowing traders to easily incorporate these insights into their charts, thereby enhancing decision-making and promoting precision-based trading.
Key Economic Indicators to Monitor
Traders should keep a close eye on several key economic indicators that can significantly impact market conditions:
Gross Domestic Product (GDP): A primary measure of economic strength, GDP growth typically boosts investor confidence, leading to stock market gains and increased corporate investment. Conversely, a contracting GDP signals economic distress, often triggering market sell-offs.
Inflation Rates: Inflation erodes consumer purchasing power and shapes monetary policy. Central banks typically set inflation targets around 2%. Stable inflation is vital for long-term economic growth, and central banks adjust monetary policies accordingly.
Interest Rates: Central bank decisions on interest rates influence economic growth and exchange rates. Traders closely monitor signals regarding future rate changes, as differences in rate expectations between major economies can drive currency value shifts.
Unemployment and Labor Market Data: The health of the labor market influences consumer spending and economic stability. Strong labor markets can lead to monetary policy tightening if rising wage pressures increase inflation.
Trade Balance and Current Account: A country’s balance of trade—its exports versus imports—directly impacts currency value. A trade surplus strengthens the domestic currency, while a trade deficit weakens it.
Utilizing Economic Calendars
Economic calendars are essential tools for traders, providing scheduled releases of important economic data, central bank statements, and geopolitical events. By following these events, traders can anticipate potential market fluctuations and prepare for profitable trades or implement risk management strategies. For instance, adjusting stop-loss orders or closing positions can help mitigate risks during periods of anticipated volatility.
Risk Management in Fundamental Analysis
Volatility is a natural challenge for traders, especially during significant economic events. Central bank decisions, inflation levels, and political tensions can trigger aggressive price movements, making risk management a core component of any trading strategy. Professional traders often employ hedging instruments and prudent position sizing to contain potential losses.
Geopolitical events, such as the Russia-Ukraine war, have demonstrated the impact of external forces on trading. Traders who anticipated supply shortages were able to capitalize on price fluctuations. Similarly, monitoring political events, such as the 2024 U.S. elections, can prepare traders for market volatility stemming from anticipated policy changes.
Conclusion
By tracking key economic indicators such as GDP growth, inflation, and interest rates, traders can make informed long-term forecasts and adjust their positions accordingly. Coupling fundamental knowledge with technical analysis strengthens trading strategies and enhances decision-making processes. This comprehensive approach also improves risk management, allowing traders to analyze multiple factors and better identify potential price movements.
Disclaimer: Trading involves risks and may not be suitable for all investors. Use your expertise wisely and evaluate all associated risks before making an investment decision.
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About Octa: Octa is an international CFD broker providing online trading services worldwide since 2011. With commission-free access to financial markets, Octa serves clients from 180 countries, boasting over 52 million trading accounts. The company is committed to supporting clients in achieving their investment goals through educational resources and analytical tools. Additionally, Octa is involved in charitable initiatives, enhancing educational infrastructure and supporting local communities. In Southeast Asia, Octa has received accolades such as the ‘Best Trading Platform Malaysia 2024’ and ‘Most Reliable Broker Asia 2023’.
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