Stockholm rides financial rollercoaster
Paul O'Mahony · 22 Jan 2008, 17:54
Published: 22 Jan 2008 17:54 GMT+01:00
The OMXS index shed four percent in early trading on the back of continued turmoil on the Asian markets.
By lunchtime however share prices had undergone a recovery amid rumours that the cavalry was about to arrive in the form of the US Federal Reserve.
"A serious interest rate reduction is needed to reduce the pressure," said SEB bank analyst Martin Guri when TT spoke to him on Tuesday morning.
And his prayers were answered when, at 2.30pm Swedish time, the Fed dropped interest rates by a whopping 0.75 percentage points to 3.5 percent.
Shares in Stockholm shot up 3.5 percent as a direct result.
But the joy was short-lived as some analysts began to talk of a panic situation, wondering why such drastic action was necessary a week before the Fed's next scheduled meeting.
Just half an hour after the 3.5 percent leap, shares in Stockholm fell back down to their pre-announcement levels.
But the OMXS index managed one last climb before close of trading, finishing 2.4 percent higher than at the start of the day.
"Shareholders have been very active: 20,000 deals involving private individuals in the first half hour. That's the highest amount of activity for many years. Swedes are running to catch up and it's hard to know what's going to happen," said Claes Hemberg, spokesman for on-line broker Avanza.