is the Stock market recovering from the abyss?


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Tuesday, 06 September 2011
Some recovery seems to be taking place in the stock exchanges across Europe after yesterday's sharp fall in share prices. The Helsinki Stock Exchange has begun the morning with an improving stock index.

For the Stockholm Stock Exchange, the biggest stock market in the Scandinavia, it swung wildly from a plus to a minus and back again to the positive territory during the first hour of trading, reflecting the bongy jumpy modes seen in Europe in the morning.

But later this afternoon, U.S. investors have their say, for the first time this week.
Those who had hoped for a strong comeback for the Stockholm Stock Exchange has so far on Tuesday hoping for much.

The driver for this was that investors who returned to the stock markets, preferred to be more on the defensive side in front of cyclically sensitive. The strongest sectors in Stockholm were healthcare and telecom, worst were the engineering and finance sectors.

On Monday, dominated the news of the debt crisis in Europe. At Tuesday's news the flow is relatively thin so far, both in terms of stock market and macro economic news and news about Europe.

After about 45 minutes of trading, the OMXS30 index had risen by 0.2 percent to 889. So far turnover on the Stockholm Stock Exchange was Skr3.5 billion.

After two trading days, there were signs that there was nervousness in the market such that  little noises here and there were enough to keep market places into the defensive.

In the morning, the Swiss National Bank took drastic action to stem itself against the crippling strength of the Swiss franc, saying it will introduce a floor at 1.2 francs versus the euro.
It also warned of further moves should the Swiss economy suffer from the strong franc.

"The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development," the central bank said in a statement. "The SNB is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20."

The Swiss franc weakened sharply after the SNB announcement, trading at 1.1969 versus the euro after opening at 1.1091. Likewise, the Swiss Market Index spiked sharply, gaining 4.2 percent in early Tuesday trade.

ABB, which is traded in Swiss francs in Zurich and in kronor in Stockholm, rose by 4.8 percent in Zurich and fell by 3.3 percent in Stockholm.

Boliden Capital’s CEO Lennart Evrell said that the company has seen less evidence that demand has been affected in the wake of the financial turmoil, but that demand for Boliden's products so far was great. Boliden's shares rose 0.3 percent.

All industrial sectors will help the stock market but the telecom operators will pull the index most to the black- it seems. Tele2 is one of clear winners among the heavier share hitters. The company’s share would have risen by 3 percent.

The sectors that can do least well are the manufacturing sectors. That's because many of the major engineering companies are trading at zero. This applies, for example, to SKF and Sandvik.

In the afternoon opens the U.S. markets, for the first time this week. Stock markets were closed on Tuesday due to Labour Day celebrations there. Trading in index futures are currently low on the minus, which may indicate that the stock markets might open slightly down.
By Team

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