Tehran Stock Exchange affected by changes in global markets
According to Tejarat News, on Friday evening, not only commodity markets but also global stocks reacted to the published statistics on US inflation and fell.
US inflation hit a new 40-year high in May, reaching 8.6 percent.
Quoted from the world of economyThe country’s interest rate is now expected to rise to 1.5 percent by the end of September. Similar conditions prevail in other parts of the world.
This can be traced to the efforts of monetary authorities in various countries to raise interest rates in order to control inflation.
This has led to expectations in commodity markets to weaken prices.
Although the reduction in supply left over from the Russia-Ukraine war is still in the Commodities’ favor, the threat to the demand side seems to be more serious. It is important for the Tehran Stock Exchange to know that 70% of the total value of this market is in the hands of commodity-based stocks. Stocks that play a decisive role in determining the direction of the main thermometer of the glass hall.
Changes in global markets are good news for Exchange Tehran did not include.
Trading on the stock exchange started yesterday with the United States’s 8.6 percent inflation on Friday scaring off the global markets, and the promise of the European Central Bank President Christine Lagarde to increase interest rates in the euro area and the current situation in East Asia has added to this fear.
This caused the prices of basic goods to fall on Friday evening. All these developments have taken place at a time when the stagnation of prices in the Nima system only provides the possibility of the stock market suffering from the current situation, and may exacerbate the current price reduction bottleneck in this market in the future than the current situation.
The story of a fall
The world economy is not doing well today. This can be seen from the efforts of the monetary authorities of different countries to increase the price of money or the same interest rate in the meetings that the central banks of these countries are raising these days.
Most of these countries, which at the time of the Corona outbreak and the increase in preventive measures, implemented extensive quarantines at the national level, now have to cross the barrier of the Covid-19 epidemic at the international level and face the problems that financial assistance provided to the economies at that time. It has brought their country to fruition.
Studies show that, on the one hand, financial assistance and its adequacy for living have changed people’s work habits and work ethic in countries to some extent, and on the other hand, they have created a level of liquidity that can not lead to increased inflation; A factor that has led to a sharp reaction of global markets and the fall in prices in many markets and economic indicators.
Shock to markets
Surveys show that the situation in the financial markets is not very close to the uptrend. Stock indices in most of the world’s major economies are declining, and commodity prices around the world are in a similar situation.
On Friday, the Dow Jones Industrial Average recorded a drop of 800 points, which is unprecedented since January. A look at the changes in the price level of stock indices in recent months shows that these markets have been able to adapt to the consequences of possible events since the first signs of recession appeared in the world’s major economies.
The performance of US stock markets confirms that since the reversal of the downtrend in US markets, the Dow Jones Industrial Average has fallen 146.96 percent and the S&P 500 index has fallen 187.7 percent; Until January of this year, however, these indicators were growing at an acceptable rate due to rising inflation expectations and artificially boosting the purchasing power of the people in the United States and other countries.
Global markets fell on Friday, however, as statistics showed the inability of monetary policymakers to curb inflation.
The Dow fell 800 points (2.73%) after the United States’ inflation rate reached 8.6% in the 12 months to May. Economic data suggest that such a figure in the US economy has been unprecedented since 1981.
The analytical and psychological burden of high inflation in the United States caused the European stock market to face a serious shock yesterday. Trading on Friday ended in a situation where the US inflation shock Stoxx 600 lowered the most important indicator of stock prices in the euro area by 2.7%.
It seems that the high volume of liquidity creation in recent years will not only compensate for the low inflation, which is due to the continuous growth of the economy and productivity in the coming months, but if effective measures are not taken, it may see an increase in this period. Rates too.
That’s exactly why the European Central Bank has been pushing for higher interest rates in the bloc for 11 years. In other central banks, too, interest rates have either risen so far, or talk of raising them is serious. Because interest rates are inversely related to asset prices, this has led to expectations in commodity markets that prices are declining.
However, it is safe to say that what has added to the selling pressure in both stock and asset markets in recent days is the news of rising US inflation and interest rates, which are currently in the range of 0.75 to 1 percent. An examination of economic data shows that the rate was negative at 0.25 about a year ago.
A look at changes in the Federal Reserve’s balance sheet also shows that the rapid growth of liquidity is causing such inflation. The Federal Reserve’s balance sheet is currently in the range of $ 88,900 billion, up from just $ 8,621 billion in 2007.
Such a large difference, along with the return of inflation to the 1981 range, has led many to believe that if the upward trend in prices continues, it is even possible for the benchmark interest rate to rise from the current 0.75 to the current one percent level. In that year, the US interest rate was 15.8 percent.
From inflation optimism to refuting a claim
But what is the connection between such numbers and the stock market in Iran? As mentioned in previous reports, about 70% of the active symbols in Exchange Tehran earns its income from the production and sale of basic goods such as petrochemicals, refining and basic metals, and the like.
As a country that has gained a significant portion of its foreign exchange earnings through the sale of such products during the difficult years of sanctions, provided that sanctions are circumvented, Iran is highly sensitive to the performance of these companies in both domestic and foreign sales.
On the other hand, they have been the symbols that in recent years have made the stock market a good platform to maintain the purchasing power of shareholders, so it is natural that the stock market in the current context of inflation of large economies, given the sensitivity of the situation, a special look at economic statistics. Have an international.
In the last days of last week, news of monetary policymakers’ preferences along with falling global prices, especially in assets such as copper, aluminum, chemicals and other commodities, indicated that domestic stocks, like those of the world’s leading financial markets, were likely to be affected.
This is not good news for stock market participants as inflation expectations in Iran continue to rise, as rising interest rates along with reduced supply left over from the Ukraine-Russia war complicate matters.
Worse still is the fact that the resurgence of the Chinese corona has led to a new round of quarantine that is likely to have a negative impact on global demand for many goods again. This, in a situation where the half dollar rate remains the same in the previous channel, darkens the path of the stock market for market participants, because even with the growth of the dollar in the open market, one can not hope to compensate for the decline in world prices; Even now, Russian commodities in the stock market have become serious competitors to commodities such as Iranian oil and steel, and are going to threaten to sell some in addition to prices.
Hence, it can be said that inflation can no longer be the same as before Exchange To achieve an uptrend. However, this indicator itself as an important threat still overshadows the purchasing power of the people.
Such factors show that despite the severity of sanctions on the stock market and the country’s economy, Iran’s relationship with the world economy in the current situation is maintained only in a way that is more affected by negative events than positive events; A factor that should naturally be considered in the analysis of the current situation of the domestic stock market and use its opportunities and threats.