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Stock market collapse escalates as concern in the USA and the Europe makes the small Swedish market looks like a punching bag.

Thursday, 22 September 2011
Thursday's trading session in Stockholm is characterized by a strong decline, in line with the rest of Europe, after the negative reaction to statements from the US Federal Reserve on Wednesday evening.

Also the slightly weaker purchasing managers' index from Germany, France and EMU for September, was also an additional damper on the mood in the morning.

By mid day, the big corporations, the OMXS30 was down by 4 percent. The cyclical company shares led the way to the worst development - engineering and commodity-related shares were trading at the bottom.

The Swedish krona weakened against the euro and dollar. On the bond market the Swedish 10-year bond yield was down 7 basis points to 1.69 percent.

The European stock market trading was affected most by the banking and financial services and commodity-related companies. The regional index Euro Stoxx 50 was down 3.6 percent. Frankfurt Stock Exchange's DAX index dropped 3.4 percent, and the London Stock Exchange's FTSE 100 was down 3.6 percent, weighed down mainly by the mining companies. Paris Stock Exchange's CAC 40 was 3.8 percent lower.

Stock markets in New York closed deep in red on Wednesday after the Federal Reserve indicated that the central bank sees "significant downside risks" for the U.S. economy.
Moody's lowered on Wednesday its ratings for U.S. banks Bank of America and Wells Fargo. Citigroup was allowed to keep its credit rating for long-term bank borrowings, while the rating for short-term borrowing was reduced by one step. Bank of America fell 7.5 percent, Wells Fargo was down 3.9 percent and Citigroup dropped 5.2 percent in New York on Wednesday night.

In Stockholm, the performances of the banks were somewhat milder in reaction to the USA. Worse than the index went Swedbank’s A shares was down 3.5 percent at Skr70:60 and Nordea, which dropped 3.8 percent to Skr50:80.

Volvo published on Thursday morning, new financial targets for the group, which will be applicable from 2012 onwards. The new goals are formulated by comparison with its competitors, and stipulate an organic sales growth of industrial activity equal to or greater than a weighted average of comparable competitors. Operating margin for the industrial activity will be among the highest in comparison with the different movements and competitors. Volvo B shares was down 3.9 percent at Skr69:60 in early trading.

Assa Abloy launches a restructuring program expected to cost the company a total of just over Skr1.3 billion with a one-time effect on earnings of approximately Skr 0.9 billion in 2011. The company also reported a capital gain from the sale of Cardo Flow Solutions and Lorentzen & Wettre of about Skr430 million, and raised the prospect of the synergies in the acquisition of Crawford.

The message did not seem to be appreciating to investors  as Assa Abloy shares snak 5.6 percent to Skr 138:80 morning.
Retail Institute gave a forecast of a growth of 2.0 percent for the Swedish retail sales in 2011, while growth for 2012 is projected to increase to 2.5 percent.
The market turbulence continued and it just a matter of wait and see how the market will turn by its close later.
By Scancomark.se Team


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