Business

Because it might be worth getting into the Dax incident

Frankfurt Stock Exchange

A stock trader sits under the Dax curve in front of his monitors. The leading index slipped 4.6% in the past trading week.

(Photo: dpa)

The stock market sell-off accelerated over the weekend. The minus for the entire trading week is 4.6%. Calculated from last Monday’s weekly high, the stock market barometer even dropped 6% by Friday evening.

This is an accident. However, as the past has shown, such crashes can be a good opportunity to get started. Because the two reasons for the sell-off are unlikely to be sustainable.

Two reasons have accelerated this sell-off over the past week.

1. Fear of a new euro crisis

First, there is the announcement by the European Central Bank that it will raise interest rates. This quickly triggered fears of a new euro crisis. The interest rate difference (spread) between Italian and German government bonds has risen to a new multi-year high.

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The absolute value of an Italian ten-year government bond also rose to 3.85 per cent, reaching the level from 1999 to 2013.

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