Stock exchanges in the balance: the mouse syndrome (2006)

After four years of steady, more or less decisive but uninterrupted growth since autumn 2002, the world’s leading stock exchanges are showing signs of indecision and disorientation. They behave like mice that cannot find their way out of labyrinths prepared for them by researchers, moving continuously and alternately from the little door that leads to rescue to the trapdoor that would lead them back into the cage, without deciding on either salvation or damnation. The steady, positive growth of the real economy indices, as well as the remarkable growth of China and India and the improvement in Russia’s financial conditions, together with the belief that the rise in property market values had come to a standstill, were (and continue to be) all elements that push savings towards risk capital and urge the ‘pendulum’ towards growth. On the other hand, the surge in oil prices and announcements of upward adjustments to benchmark interest rates (following warnings of price rises) induce the public and operators to be cautious, slow down prices and depress indices – albeit briefly- indexes to the downside until they bounce back up again, as soon as there is reassurance that consumers and producers have absorbed the oil price rises, or when the Federal Reserve or the ECB have raised official rates, but not to the levels feared and inflation, although rising, has not exceeded 3% in the main countries. However, the overall picture at the end of July was positive apart from the ups and downs and after the fall in indices in mid-May (which has not yet been absorbed). Additionally, there was a slight but sure sign of growth below the fluctuations, which seems reasonable to expect also for the coming months.