Stock Market News: Stock markets to see heavy selling this summer, say top economist
As per the economists, the decisions taken by the central banks to increase the interest rates in order to fight against the skyrocketing inflation will lead to heavy selling in the stock markets this summer.
According to Rosa and Roubini, a consultancy firm co-founded by market bear Nouriel Roubini and Brunello Rosa, there will be more bad times in the market due to the central banks decision to tighten monetary policies.
On Friday, Brunello Rosa said, “It is very hard to be totally optimistic when all things are opposite to you, from the increase in interest rates all over the world to growth slow down and rise in inflation. All these factors are very strongly indicating towards the reappreciation of the economic fundamentals all across the globe mainly in terms of growth. ”
Along with that, Rosa added that “Initially, investors had welcomed the steps taken by central banks to increase the rates by 75 basis points. But there is also a warning attached to it that there can be such hikes in the upcoming time, and it will be affecting the stock markets very badly. ”
Brunello Rosa also said, “On Thursday after the policymakers in London highlighted the fact that the economy of the UK is facing the risks of recession, it seems that the Bank of England is the only central bank which is acting more realistically.”
Rosa further continued, “We all know that central banks are taking harsh steps just to make sure that inflation is in control. But this will surely affect the stock market very negatively, and this should also be taken into consideration.”
On Thursday, the Nasdaq Composite had fallen by nearly 5%, and the Dow Jones Industrial Average also dipped by around 1000 points, erasing Wednesday’s entire rally.
On Friday, European and Asian markets also fell following the sell-off in the American markets. The pan European Stoxx 600 fell by 1%, Hong Kong’s Hang Seng index also dropped by almost 3.81%, while the index of mainland China’s Shanghai Composite, dipped by 2.16%.
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