The worst year since 2008, in the case of the United States. The worst since 2018, in the case of Europe. For world stock exchanges, 2022 was much more complicated than the pandemic 2020, when Covid-19 entered the economic world. The balance is negative for both sides of the Atlantic Ocean. But with a specific prevalence for Wall Street, in the wake of the restrictive monetary policy adopted by global central banks to counter the double-digit increases in consumer prices. Piazza Affari leaves 13% on the ground on an annual basis. The Nasdaq nearly three times as much.
The toughest year in a while has served. The last session of the financial squares of 2022 marked by the Russian invasion of Ukraine and the persistence of inflation on a global scale ended worse than the latest forecasts by analysts. The signs were all there. At the opening of trading, Wall Street was heading towards the darkest 365 days since 2008 which was marked by the pyrotechnic crack of the fourth US bank, Dick Fuld’s Lehman Brothers who the man who ferried the Wall Street giant towards receivership . After 14 years it is the uncertainty that affects the price lists. Covid-19, the war in Ukraine, the tensions between the US and China over Taiwan, the flare-ups in consumer prices, the energy crisis. There are many open fronts that need answers.
The conjunction of the fronts of uncertainty has led the world to a situation of “permacrisis”, as defined by the president of the European Central Bank Christine Lagarde just under a month ago. The US indices suffered most significantly, as the US central bank, Jerome Powell’s Federal Reserve, was the first to begin the process of normalizing its monetary policy. The Dow Jones is the list that performed best, with an annual drop – at yesterday’s close – of 8.58%, followed by the S&P 500 and Nasdaq, with drops of 19.24% and 33.03% respectively %. Despite the year-to-date losses, the Dow gained about 15% in the quarter and will break a streak of three consecutive quarterly declines, as will the S&P 500, up 7.35% since October; the Nasdaq, on the other hand, is losing almost 1% and is heading towards a negative fourth quarter in a row for the first time since 2001.
The European indices were also bad, recording their most negative performance since 2018. The forecasts made on the eve of the negotiation have been respected. The best performance is that of Madrid which drops 6.1%, followed by Paris at -9.5%, then Frankfurt -13%. Followed by Milan -13.3%, Amsterdam -13.6% and Zurich -17%. The exception, positively, is represented by London, which saves a minimum gain of 0.66%. Overall, however, the worst stock market is that of Moscow, with the economy sunk by the sanctions following the war unleashed in Ukraine, which closes with a -43.1% of the Moex index. On the positive side, the Istanbul stock exchange stands out with the Bist 100 index rising by 196.1%, rewarded by local investors who buy shares as a safe haven against high inflation. Positive, among the minor stock exchanges, also Mumbai, Singapore, Sao Paulo, all just over 4% up.
The impact of permacrisis on Piazza Affari is significant. In this year of complicated reading and with very few firm points, the overall capitalization of companies listed on the Milan Stock Exchange has dropped to 626 billion euros against 757 billion at the end of 2021. But it is the relationship with the gross domestic product that best explains the extent of the collapse: according to data processed by Borsa Italiana, the value of Piazza Affari today corresponds to 33.9% of GDP, against 43.1% a year ago. For Milan it was the worst year since 2018, the second worst of the last ten years and the sixth worst since 2000. And the hope is that 2023 will be a more rosy year. The increases announced by Lagarde at the last meeting of the Governing Council of the ECB, which, net of surprises, should be three consecutive hikes of 50 basis points for the first three meetings of next year, could influence the performance of share prices. At least for the first half of 2023. For investors and savers, sailing to a safe haven may not be over yet.