The Tribune

ACTIVTRADES WEEKLY

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Decency and stock exchanges are two different things. If you did not know that yet, you could see it again this week. The Queen dies and what are the stockbrokers doing in the City of London? Still trading stocks as if nothing happened. At least they could have offered a reasonable discount. A black Friday would have been a sign. But what does the FTSE 100 stock index do? Closes with a comfortable gain of more than 1.5 percent. A thoroughly cheerful trading day.

But what the protocol for the death of the Queen provides is: No stock exchange trading on the day of the funeral, and none on the day of the coronation of the new king. Business associations have little choice but to calculate what this will cost. It was £6bn in sales due to idle factories and supermarket checkouts for the wedding of Prince William, now the heir to the throne. If two public holidays are announced at the same time, it almost borders on a deliberate plunge into recession. But we already had that with decency.

On Thursday, Christine Lagarde, the European Central Bank’s (ECB) president, announced an historically large interest rate hike by her central bank council. What are the stock markets doing? Nothing. Complete ignorance. It was only when Lagarde later pointed to an economically difficult winter that the stock exchanges twitched briefly before remembering that they had already priced this in anyway. The German Dax index change was 0.09 percent at the end of the second and, so far largest, interest rate turnaround day in 2022. But maybe there is more to come because the inflation drivers heating oil, diesel and natural gas have so far hardly been impressed by the diligent efforts of the central banks and remain expensive.

Hundreds of thousands of British citizens can no longer afford to pay their energy bills. The Bank of England predicts a long downturn. The new British Prime Minister wants to limit heating and electricity costs for private households to £2,500 a year. Energy taxes are to be temporarily suspended. There should also be price limits for companies for the next six months.

The situation in Great Britain shows what is still to come for the rest of Europe. Russia wants to wear Europe down,and hopes for a cold winter so that the sanctions front in Western Europe breaks down. President Vladimir Putin made that clear during the Eastern Economic Forum in Vladivostok. Mainly because of expensive energy as a result of the Ukraine war, inflation in the euro zone has now reached a record level of 9.1 percent

Never before has the ECB raised interest rates as much as it did on Friday. It is questionable whether the monetary watchdogs will be able to curb record inflation quickly. Consumers will still feel the consequences clearly. Lending rates for real estate and companies will move relatively quickly with the key interest rates.

The financial institutions’ costs of raising money are climbing. The result will be that loans for households and companies are also becoming more expensive. As a rule, the banks pass on the increased costs directly to consumers and companies in the form of higher interest rates