Tags: Stock Markets | Crisis | Europe | Economy

Stock Markets Show Next Phase of Crisis Arriving in Europe

By    |   Tuesday, 29 Jul 2014 07:17 PM

Just a few years ago, Europe was the center of an economic catastrophe and stock prices indicate we could see more problems from that region before the end of the year.

Stock market investors make buy and sell decisions based on what they expect to see in the future. If they expect economic growth to push stock prices higher, they buy. When investors fear an economic downturn, they sell.

Market trends will not always correctly forecast economic trends but they do have an admirable record. Stock prices are included as one of the ten components in the Conference Board Leading Economic Index.

In Greece, a bear market has received little notice yet indicates trouble could be ahead for the country. Bear markets are usually defined as price declines of 20 percent or more. Since March, Greek stocks have fallen as much as 24 percent.

Portuguese stocks fell more than 16 percent while stocks in Ireland are down nearly 15 percent. Italian and Austrian stocks have fallen nearly 10 percent in a month. Spanish stocks show an 8 percent decline in a little more than a month.

Stock prices in France are 7 percent below their June highs. Germany, the Netherlands and Sweden are each about 5 percent below their highs.

Weakness in European stocks is broad-based and indicates potential problems. In the last few years, we have learned that economic crises usually spread from one country to another. Investors should consider taking profits in U.S. stocks if the weakness in European markets spreads.


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MichaelCarr
Just a few years ago, Europe was the center of an economic catastrophe and stock prices indicate we could see more problems from that region before the end of the year.
Stock Markets, Crisis, Europe, Economy
253
2014-17-29
Tuesday, 29 Jul 2014 07:17 PM
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