Definition of Headline effect:
The term "headline effect" refers to the effect that negative news in the popular press has on a corporation or an economy. Many economists believe that negative news headlines make consumers more reluctant to spend money.
Effect stating that negative news in the mainstream media has an effect on companies and / or the economy, as the reaction by the public to certain headlines can be dramatic and can even cause consumers to not want to spend money.
Whether it is justified or not, the investing public's reaction to a headline can be very dramatic, such that the public’s reaction to bad news in the headlines can be out of proportion when compared with the reaction to good news in the headlines. Therefore, when a government agency or central bank releases an unfavorable economic report, traders, investors and members of the investing public might disproportionately react to that bad news by converting, selling or shorting funds away from the currency that has been affected. While this market reaction is, to some extent, natural and expected, the headline effect can speed up and worsen the severity of the market reaction by bringing bad news to the forefront of the trading public's mind.
Meaning of Headline effect & Headline effect Definition