World markets continue their downward trend as every major economy is in some sort of crisis.
Another week in the red for world markets, as economic crises grip every major economy from the United States, Germany, the Netherlands, and China. August could end in stark contrast to July’s irrational market rally.
But first, let’s look at some numbers:
- Disaster struck in the United States, with the S&P 500 losing -1,97%; the Nasdaq Composite -2,26% and the Dow Jones -2,09%;
- The crisis continued in Europe too, with Frankfurt closing the week at -1,76%, London at -3,48%, and Milan at -2,35%;
- Finally, Asian markets followed a similar pattern with the Tokyo Nikkei losing -3,55%, Shanghai -0,88%, and Hong Kong -3,99%.
The Netherlands falls into a recession
In the European Union, another major industrial power fell into recession this week. The Netherlands released quarterly GDP data showing two consecutive quarters of contraction, the definition of a technical recession.
The Netherlands is Europe’s fifth-largest economy and is the continent’s main commercial hub. The port of Rotterdam is the largest outside of Asia with an annual capacity of 15,9 TEU.
In June, Germany similarly fell into recession, showing weaker industrial output and high consumer prices.
Despite two of the bloc’s largest economies falling into recession, the European Central Bank is adamant to continue raising interest rates. On Friday, EU inflation showed a slight drop to 5,3%; but core inflation remains stable at 5,5%.
The ECB usually decides its rate policies according to core inflation, therefore they might continue hiking. ECB governor Christine Lagarde often declared that inflation is their priority, even if it means widespread recession.
France and Italy, the EU’s second and third-largest economies, recently reported GDP growth in the last quarter. Both of these countries usually perform better during the summer thanks to the tourism influx. This also means they should avoid a recession in 2023.
Russian ruble to historic lows
In other news, this week the Russian ruble hit a new low this week, breaking the 100 for a dollar point.
The ruble hit its lowest point in history in February 2022, right after the illegal Russian invasion of Ukraine. One month later, however, the ruble had completely rebounded, going back to pre-war levels.
Since then the ruble has been steadily losing value, approaching the February 2022 levels again this week. An emergency meeting between Russian President Vladimir Putin and the Ministry of Economic Development tried to salvage the situation.
The emergency measures seem to have stopped the ruble’s freefall, but it is unclear if Russia will be ready for another currency crisis in the future.
