At the Zagreb Stock Exchange, Crobex indices fell more than 2.5 percent in the first minutes of trading on Tuesday, a result of the spillover of negative sentiment from global stock exchanges, where stock prices are under strong pressure.
The Crobex index was down 2.9 percent at around 9:45 AM, at 1,832 points, while Crobex10 slid 2.6 percent to 1,061 points. This wiped out all gains of the index since the beginning of the year, leaving Crobex down 0.6 percent since the start of 2018, and Crobex10 down 1.4 percent.
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Regular trading reached 4.3 million kuna, which is almost at the level of daily trading in recent days.
“The sharp decline in stock prices on global exchanges, which last occurred 10 years ago, is likely to provoke a negative reaction from Crobex on Tuesday at the Zagreb Stock Exchange, probably with somewhat higher trading volume,” said Ana Turudić, a financial analyst at Raiffeisenbank Austria, before the start of trading on the exchange.
Almost all stocks traded this morning recorded price declines. The largest drop was in the stock price of the IGH Institute, down 9.9 percent, followed by Atlantska plovidba, with a loss of 9.8 percent.
Stocks of Ingra and Tehnika fell more than 7.5 percent, while the prices of Ledo, Jamnica, Viktor Lenac, and Optima dropped more than 5 percent.
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The price drop at the Zagreb Stock Exchange was expected due to the negative impact from global markets.
On Wall Street on Monday, the Dow Jones and S&P 500 indices fell more than 4 percent, marking their largest daily loss in over six years, with the Dow at one point down nearly 1,600 points, the largest in history.
Following the crash on Wall Street, stock prices sharply fell on Asian and European exchanges on Tuesday, with futures indices on Wall Street indicating further declines in stock prices.
Global stock exchanges have been rising strongly for some time, with indices on Wall Street and many other markets reaching all-time highs, thanks to stable growth in the global economy, low money costs, and rising corporate earnings.
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Given the prolonged market growth since 2008, a correction in stock prices was expected, spurred by data released on Friday from the U.S. labor market, which showed strong growth in employment and wages.
This could stimulate growth in consumption and inflation, prompting the U.S. central bank to accelerate the pace of interest rate hikes this year. Other central banks may also tighten monetary policy, leading to rising bond yields.
Higher yields hurt stocks as they increase borrowing costs for companies. Additionally, higher yields present an alternative for investors, who may pull some funds from stocks to buy bonds.
European stock exchanges fell for the seventh consecutive day
On European exchanges on Tuesday morning, stock prices sharply fell, following the downward trajectory of indices on Wall Street and other global markets, as investors fear rising inflation and interest rate hikes.
