The stock markets continue to suffer. Even today, the equity markets of the Old Continent recorded a sharp decline, penalized by a macroeconomic figure that comes from afar. The learning of this unexpected news worried traders and sent the stock exchanges down, which all reacted with drops close to 1%.
In the morning, before the opening of the European lists, a macroeconomic figure hit the markets and triggered fears among operators. The macroeconomic figure concerned the growth of the Chinese economy. In the second quarter of the year, Beijing’s annual Gross Domestic Product grew by 7.9%, less than expected and less than half of the 18.3% of the previous quarter. Why has a data from such a distant country negatively influenced the European stock exchanges and then Wall Street?
This unexpected news worried traders and sent the stock exchanges to a halt
Chinese GDP is a very important data for investors, because they consider it a kind of indicator on the trend of world economic growth. Analysts view a significant decline in China’s annual GDP as a sign of slowing global economic growth. Of course, this scenario doesn’t appeal to equity markets.
Yet it is impossible not to notice how the stock markets are also worried when the economy grows too much, for fear of inflation. The rise in prices is the black beast of central banks, which act on interest rates according to inflation targets. If inflation rises too much and very quickly, central banks are forced to raise interest rates. This action would lead to the interruption of the huge flow of money that has been flooding the markets since March 2021.
The disappointment of the Chinese GDP figure has caused all the squares of the Old Continent to go down. After a difficult morning, prices worsened in the afternoon following the weak opening on Wall Street. At the end of the session, the German stock exchange lost 1.1%, while the Paris and London stock exchanges closed down 0.9%. Among the main European lists, Piazza Affari had the biggest loss. The Ftse Mib index (INDEX:FTSEMIB) lost 1.2% to end at 24,875 points. Unfortunately, the close below 24,900 points is not encouraging. As our Experts wrote yesterday in the article “Beware of these levels because the stock market can sprint or collapse“, Now Piazza Affari risks further declines.
Deepening
This the multidays analysis and the analysis of international markets by the ProiezionidiBorsa Research Department
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