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Stock exchange panic selling due to euro economy deterioration

A new corrective is available for the world's stock markets.

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Stock exchange panic selling due to euro economy deterioration

A new corrective is available for the world's stock markets. Market panic resounding again. The Ibex-35 closed the session with a 2.5% drop to 7,959 points. This was its lowest level since March. It also reflects the tension that accompanied the outbreak of war in Ukraine. London, Germany, and Italy saw a collapse that was more severe than London. The red numbers were at 3%.

As new benchmarks point towards a direct path of economic contraction, investors are fleeing risky investments. Yesterday's weak PMI data from Europe drove the single currency to a twenty-year low against its dollar counterpart. Yal West Texas oil, a benchmark in the US, is below 100 dollars. AXA Investment Managers warns that investors must be ready for greater losses.

Particularly the securities that were closely linked to the economy cycle suffered from the fear of an economic slowdown despite the central banks' efforts to fight inflation. Repsol was the leader in falls at the national floor with an 8.8% decrease, followed closely by Enagas (-5.96%).

In the hope that economic pressure will force banks to end the current cycle of interest rate increases that have been so profitable to their margins, banks also became red. CaixaBank saw falls of 5.6%, while Banco Sabadell saw close to 5.5%. Bankinter, on the other hand, lost 4.8% while Santander, BBVA, and 3.6% respectively.

"The main concerns are a decrease in growth expectations and persistent inflation. These factors do not improve, and will continue to drive the market trend... until adjustment is complete this summer as we estimate," Bankinter's analysis section indicates.

True, falls can result in punctual bounces. However, the overall market sentiment is still very negative. Data such as Sentix Investor Confidence Index in the euro area also show this. It dropped from -15.8 in May to -26.4 in July, and is far below the consensus of -19.9 points.

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