The by many feared decline in share prices in October did not occur this time. On the contrary, the capital markets trended upwards for the first time in a long time. It was not the economic omens that justified this movement. It was rather the assumptions as to how far the central banks can still intensify their interest rate measures before they thereby manifest a recession which, due to divergent and hardly interest rate-sensitive inflation parameters, puts the ground of credibility under their feet at risk. As a result, a rare spectacle emerged, namely a kind of cooperation between central banks and politicians. The energy situation in Europe was significantly alleviated by dynamic purchasing behaviour on the part of governments, the social components were addressed at the same time and thus the economic pressure was slowly relieved. Meanwhile, commodity prices, which have already fallen sharply, indicate an end to the high inflation figures in the near future. Confirmation of this, however, is directly dependent on the wage price negotiations that are still underway. The hope for economic rationality remained in space and carried the development of the capital markets in October.
In this environment, the ATX was in the middle of its European benchmark indices. The several times earlier this year observed CEE "malus", has meanwhile no longer manifested. Due to the inflation-related increase in costs, an imminent economic decline was interpreted, which, as a consequence of the general price decline that had taken place before, made the ATX really cheap on the basis of historical comparisons. The market's attention is now obviously focused on whether or not these economic expectations will be reflected in the earnings reports that will soon be communicated. The volatile environment will therefore certainly remain for a while. However, as the conviction progresses that inflation, the energy crisis and even the Ukraine war will come to an end. Thereafter the view of developments will open up and allow more far-reaching positive deductions to be made again. Precisely then these current threats will later lead to a view of a better balanced European economy prepared for future challenges. Exactly what stock markets have always anticipated in their character: assessing the developments of the future.
Author:
Wolfgang Matejka, CEFA
Managing Director of Matejka & Partner Asset Management GmbH
2 November 2022
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.