What is happening on the stock markets is a “cyclical correction” after a “strong growth recorded for some time”. This is how Andrea Monticini, professor of financial econometrics at the Catholic University, explains what is happening on the stock markets. There are several factors that are causing the markets to correct course. The main one is related to fears about global economic growth. In Europe, for example, “there is the slowdown in Germany,” he highlights. But broadening the horizon, there is also the economic situation in China and “the expected slowdown in the United States.” And to make sure that the “storm is perfect”, several analysts point out, there are also “fears for the escalation in the Middle East”. But in addition to all this set of things there is a “phase of the stock market – continues Monticini – which has grown a lot, driven by the expectations of the technology sector. There was a strong phase of initial enthusiasm on artificial intelligence but now we are realizing that we will only see the effects in the coming years. So now there is a phase in which the initial enthusiasm is being better weighed”.
And so there are no “particular elements of upheaval. These are factors that will continue over time. A correction is underway and I expect that in this first phase there will be strong volatility.” There may also be a “slight recovery but the path traced is that of a correction of the financial market that will lead to a strong decrease. It is a scenario that we are used to seeing always. There is an expansionary phase and a correction phase.” Monticini also looks at the bond market where a “fly to quality” should not be underestimated. There will be a moment of maximum volatility, in the next few days, with a preference for German bonds and with the risk of an opening of the spreads for the peripheral countries with the highest debt. These are all elements that we know.” The professor at the Catholic University also looks at the effects for Italy. For “our country, on the one hand a reduction in rates is expected and therefore a reduction in spending on interests, and on the other we will have to deal with fewer resources available for the budget law. These two factors could lead to an increase in spreads”, concludes Monticini.