Stock exchanges falling. Four-monthly report on stock market trends (2004)
At the end of July 2004, the stock indexes of the world’s main stock exchanges were down compared to four months ago. The biggest drop (over 7%) was recorded by the Nasdaq, but there were also marked decreases in Frankfurt (-6.1%), the Nikkei and the Dow Jones (-5.2% and -3.2% respectively). The other European stock exchanges, on the other hand, fell less, but by less than 3%. Only Milan held up better, with the MIB 30 losing less than a percentage point in four months (-0.87%) and the Mibtel even posting a positive value, albeit very slightly (0.08%). Despite this better performance, the Milan Stock Exchange is nevertheless giving cause for concern. In fact, while a comparison with four months ago for all stocks traded on the Milan Stock Exchange shows a substantial parity, Eurispes points out that in the last month alone, both the MIB 30 and the Mibtel have experienced a significant drop: -5%. From January to June 2004, the Italian Stock Exchange had shown a growing trend (albeit with considerable fluctuations), so that many observers and Euripes itself had spoken of a positive trend. Since June, however, the music seems to have changed, and if the fall in the last month is no greater than the fluctuations recorded by the Italian Stock Exchange in the previous months, the current impression is that the poor results of the world’s big stock exchanges will produce more bearish winds in the coming months. If we broaden our perspective and shift our attention to the last twelve months, we see that, compared to July 2003, all the Stock Exchanges are showing positive trends, demonstrating that they have recovered from the collapse in the autumn of 2002, caused both by the joint effect of the deflation of the speculative bubble in the two previous years and the depressing effect of the attack on the Twin Towers and the war in Iraq.
Growth was comforting and higher, except for London, than the yields on long-dated government bonds. At that time, the London index was up 17.5%, Milan 22%, the Dow Jones a quarter (+25%), Paris just under a third (+31.4%), Tokyo and the Nasdaq over 40% and Frankfurt almost 50% (+49.6%). It should be borne in mind that all these increases took place against a background of extremely low inflation rates and therefore had a real value in terms of purchasing power. Moreover, the changes in the dollar/euro exchange rate had benefited US traders with European portfolios, while, symmetrically, those resident in the eurozone who had recently invested overseas are now benefiting. Whilst comparing the performance of the stock exchanges analysed one year on, it can be concluded that the past twelve months have been less satisfying for stock market savers.
The Italian Stock Exchange continues to have fewer mobile indexes, both upwards and downwards: it seems to be subject to less decisive movements than the others with smaller oscillations and, in any case, lagging behind the large stock exchanges. Piazza Affari seems to be laden with an excess of caution where expectations dominate and this may be due to the uncertainty of economic policy, squeezed as it is by the need to bring the public budget deficit to a more contained size and the ambition of the Prime Minister who continues to pursue a rationalisation (and contraction) of personal taxes. Italy’s stock market, which is always in the lead of the world’s main stock exchanges, after showing signs of recovery, seems confined to a stalemate situation in which, in the last month, as mentioned above, downward trends seem to prevail. The trend, however, is not the same for the various sectors of activity of the listed companies.