There is global stock market anxiety. During the night, the Tokyo Stock Exchange had its worst fall since “Black Monday” in 1987. The European stock markets also fell during the day and in the USA it was still down when the stock markets opened.
According to Peter Malmqvist’s analysis – it could be significantly worse. If we were to see a fall of more than 12 percent on the American stock market, within the next two stock market weeks – then it could be bloody on the stock market, he believes.
– When people read these articles about the falling stock market, it creates concern. Especially with those who have jumped into the stock market late.
– And if fund savers start withdrawing their money and putting it in the bank instead, this could get really unpleasant.
Hitting the stock market hard
That would lead to a broad decline on the stock market in the US, according to Malmqvist. He believes that we could see a fall of 20-25 percent – from when the American stock market was at its highest on July 16.
– But so far this is not the main scenario, but it is perhaps a 40 percent probability.
According to Peter Malmqvist, this would hit the Stockholm Stock Exchange hard.
– Should the American stock exchange pass 12 percent, then the Stockholm stock exchange will also go down by the same amount.
What could be required for stabilization is for the US central bank Fed to start signaling that there will be a sharper than expected interest rate cut in September, says Malmqvist.
– Then it can bounce up 3-4 percent straight away, and people immediately become more calm. But I don’t think the Fed will come out and say anything.
Not buying mode?
But other experts are more optimistic.
Lars Söderfjell, head of equities at the Bank of Åland, believes that the anxiety on the stock market will calm down within a few weeks.
– It is very rare that it hangs on for so long. But I don’t think it’s buy mode on the stock market yet. But I think you should wait and see in this situation.
But Molly Guggenheimer, equity strategist at Danske bank – believes that there may be a buy position on the stock market shortly.
– I had sat quietly in the boat for at least a few days. I think it will calm down pretty soon. It could be buying mode again in a few days, she says.
But once the stock market turns upwards again, there is a risk that the effect will not be as strong as in previous corrections.
– When the stock market falls in a strong macro period due to, for example, increased inflation, the bounce up is often significant. But when a correction comes in a weaker macro period, like now, the rebound is usually not as strong.
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