The reaction of the stock market to economic events that sapped issuers’ businesses or the entire business landscape proved to be extremely important. What exactly is a bad news to the evolution of the stock market? What is a panic peak? Experts polled by Wall-Street drafted a ‘scatterplot’ of the stock market evolution given the magnitude of the macroeconomic context and technical charts.
How important is the local and international context?
The reaction of the stock market to the dire predictions that piled up recently is a crucial aspect in the investment process. To an investor, it is very important to tune in to the signals the market sends out and its reaction to the macroeconomic news flurry.
“The stock market prices reflect the investors’ approach on the listed companies, approach built upon fundamental criteria and the underlying historical data and projections. The view of an issuer can change when unforeseen events take place or when the issuer reports financial performances below or above expectations. In the light of these events, the stock prices will properly adjust,” Andreea Gheorghe, manager research department at Intercapital Invest told Wall-Street.
Catalin Bolohan, investment director at Explore Asset Management presents the conclusions of various analyses made over the past years meant to capture the market reaction to the news.
“The conclusion was that the stock markets may have different reactions to same macroeconomic news, given the general economic condition. Taking into account the opposite influences of future earning flow and of discount rate and the company assessment methodology, the study found that in times of economic downturn, the effect over future profit flows takes precedence, while in bulls, the cut-off point, used as discount, surfaces.
Therefore, in times of economic recession, the negativ
