What causes a rally to take place?
Rallies can occur for a number of reasons. For example, before a big or highly-anticipated company announcement – such as the release of a new iPhone from Apple or a new car by Tesla – investors might flock to that company’s stock.
They would do this to benefit from the launch of the new product and the increased revenue that the company will receive from sales. In turn, this will push the price of the stock up as demand begins to outstrip supply.
Equally, longer-term rallies can be caused by larger-scale economic events such as government changes in tax policy, interest rates, regulations and other fiscal policies. Any data which signals positive change will likely cause traders to rally behind those investments which might be affected by any shift from the status quo.
Learn more about what causes share prices to change