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Financial Markets refer to platforms or systems that facilitate the exchange of financial assets such as stocks, bonds, currencies, and derivatives. These markets play a crucial role in the economy by providing a mechanism for companies, governments, and individuals to raise capital, manage risk, and invest.
Financial markets can be categorized into several types, including:
1. **Stock Markets**: Where shares of publicly traded companies are bought and sold.
2. **Bond Markets**: Where participants can issue or trade debt securities, typically to finance projects or operations.
3. **Foreign Exchange (Forex) Markets**: For the trading of currencies, facilitating international trade and investment.
4. **Derivatives Markets**: Where financial instruments like options and futures are traded, often used for hedging or speculation.
Financial markets can be further divided into primary markets (where new issues are sold) and secondary markets (where existing securities are traded). They operate on various exchanges or over-the-counter (OTC) platforms, and they are influenced by supply and demand dynamics, economic indicators, and investor sentiment. Financial markets are essential for price discovery, liquidity, and the allocation of resources within an economy.
U.S. stocks fell significantly as President Trump implemented a 20% tariff on China, with potential for more tariffs on Mexico and Canada. The Dow dropped 1.5%, the S&P 500 decreased…