Stockholm stock market in record fall

The Stockholm stock market fell 5.2 percent on Monday - the worst fall in nearly three years.

Stockholm stock market in record fall

European stock markets fell across the board on Monday and the US Dow Jones closed down 5.5 percent.

Trading in Stockholm fell as expected on Monday in the wake of the credit rating agency Standard & Poor’s downgrading of America’s credit rating late on Friday.

The day was characterised by turbulence with the initial fall of around 2.5 percent on opening rebounding into positive territory for a while while the market struggled to digest the news from the US.

The fall in the OMXS index by 5.2 percent to 281.9 was one of the largets of the European exchanges.

Peter Karlsson, chief analyst at Handelsbanken, explained the drop in the fact that Stockholm has a higher proportion of companies that are sensitive to the economic cycle.

He mentioned Swedish export-oriented companies such as Sandvik, SKF, SSAB and ABB which are all sensitive to a declining world economy.

Sandvik fell 7.4 percent to 78.50 kronor ($12), SKF fell 6.0 percent to 138.40 kronor, SSAB’s A-shares fell 7.9 percent to 63.30 kronor and ABB was down by 6.2 percent to 131.5 kronor.

Several other manufacturing shares also noted large declines with truck maker Volvo’s B shares down 6.4 percent to 76.60 kronor.

Telecommunication services, consumer durables and banking sectors all performed slightly better than the overall market index. Telecom operators fell 3.8 percent, companies in the durable goods sector fell 3.5 percent and the banking sector was down 4.9 percent.

Clothing chain Hennes & Mauritz was one of the bigger companies that held up best in the stock market free fall. HM’s B shares fell 2.1 percent to 190.50 kronor.

Of the leading European stock markets, the decline was greatest in Frankfurt, which, like Stockholm has many export-oriented and cyclical companies. Frankfurt’s DAX index fell 5.0 percent to 5,923.3, the London Stock Exchange fell 3.4 percent to 5,069.0 and in Paris was down 4.7 percent to 3,125.2.

Political leaders across the globe worked to calm fears with Swedish finance minister Anders Borg assuring households by projecting that no austerity measures will be announced in the upcoming budget.

He meanwhile emphasised the Swedish government’s cautious approach to the crisis, lessons learned from the previous bout of turbulence in 2008.

US president Barack Obama held a speech later on Monday to try to calm the US markets but his words did little to stop traders reaching for the sell button and falls continued unabated throughout the afternoon.

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Swiss central bank announces big rate hike in inflation fight

The Swiss National Bank (SNB) raises the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

Swiss central bank announces big rate hike in inflation fight

“The rate change applies from tomorrow, September 23rd 2022”, SNB said in a press release on Thursday.

It added that “inflation [in Switzerland] rose to 3.5 percent in August and is likely to remain at an elevated level for the time being”.

The latest rise in inflation is principally due to higher prices for goods, especially energy and food, according to the bank.

The SNB’s forecast for the evolution of inflation is, however, positive.

It forecasts that the rate will drop to 2.4 percent in 2023 and and 1.7 percent for 2024.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher”, the bank said.

In mid-June, the SNB tightened interest rates by half a percentage point for the first time in 15  years. Since then, inflation in Switzerland has continued to rise. For August 2022, the statisticians reported inflation of 3.5 percent, after 3.4 percent in June and July.