Below are some of the key macro-economic factors that affect the capital market:

Economic growth: General health of an economy usually has an impact on share prices. A healthy economy motivates investors to invest in the equity market. In other words, consumer spending goes high when the consumers are confident with their financial positions.

Interest rates: Low-interest rates reduce the borrowing cost, thus, organizations are able to access finances for their production needs. Consequently, to the general public, affordable loans increase the demand for goods and services.

Inflation: Consumer spending goes down when the cost of goods and services increases. For companies to remain competitive they may consider absorbing these costs which results in low corporate profits.

Exchange rates: Exporting companies reap high profits when the exchange rate is weak. During this period, the export products and services are competitive in the international market earning more profits for the corporates. On the other hand, high exchange rates may imply cheaper imports, thus, companies trading on imported goods get high profits.