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Experts expect the Stockholm Stock Exchange to lead the match to the bottom as Asia has initiated


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Monday, 08 August 2011
The Asian Stick exchanges have shown the way the markets should operate as from today – race to the bottom after the USA credit down grading of last week. The markets which were already looking weary on smaller issues now have the big real uncertainty to contend with.

The economist of the Swedish bank, SEB, Robert Bergqvist predicts that the Stockholm Stock Exchange will fall by around 2 percent in early trading on Monday.
"But I hope for some relief after the ECB said it will buy government securities and the G7 countries that they should cooperate closely to achieve stability”, he says.

"But there are still many serious problems, and I think we will have a grim stock market continued this week and the rest of the fall, "said Bergqvist.

Bergqvist notes that there is no magic bullet in line to alleviate the crisis, and there is a very small political economic space for politicians to act on. Interest rates are already around zero percent and one can not spend more money than the state budget.

"As the curves indicate now I am afraid we are heading toward a new global recession. And what worries me is that there are no tools to put into in order to boost growth again. The probability of a recession and depression has increased. "
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Bergqvist believes that it is wrong to focus on America's credit rating.
"I have great respect for it is a unique decision, while it is quite logical in view of the way public finances look like. But I agree that relying on it will place the economy on the uphill situation, plus of course that the debt crisis in Europe, which is both difficult and complex because there are many politicians in the Union involved in making decisions. "

Swedbank's chief economist, Cecilia Hermansson on her part says that stock market declines in Asia could have been even greater if the ECB had not acted to support the buying of government bonds in the euro zone. She believes that the most important thing right now is Angela Merkel's announcement that it is up to the ECB to decide how the bank will use its position to buy the Spanish and Italian government bonds.

Hermansson also believe that the activity of the U.S. credit downgrades has helped to trigger extra pressure on European decision makers.

Cecilia Hermansson believes that the market turmoil will be especially felt in Europe and not so much the United States. She predicts that the trading week may become more anxious.

"There is much uncertainty and anxiety that govern the exchanges at this time. But it was still a good message that policy makers demonstrated that they are ready to try to create stability. It can affect calming the markets today, but the question is whether that is sufficient given the nature of the Asia fall, "she says.
By Scancomark.se Team


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