September 28, 2022

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A significant decline in the stock market after a mysterious collapse - E24

A significant decline in the stock market after a mysterious collapse – E24

Stocks across the North collapsed before 10 a.m. Monday, before recovering much from the fall. Nasdaq confirms that the reason was selling from a market player.

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Out of nowhere, the Oslo and other European stock exchanges fell sharply at 09.57 am Monday.

At worst, the main index on the Oslo Stock Exchange was down 4.83 percent, having fallen nearly one percent in the minutes before the crash.

In the following period, the situation in the market was very dramatic, but the index gradually recovered from parts of the fall.

The main index ended the day down 1.73 percent.

Adevinta is among the decliners most, down about 8 percent.

Only four companies in the main index rose more than one percent on Monday, including IT company Tieto, construction company Veidekke and earthquake company PGS.

Rec Silicon’s sales are up nearly 2%. Pareto Secutities believes there may be positive news from the company in May.

Read on E24 +

‘Flash Crash’ and ‘Fat Finger’: – A typo with serious consequences

Fell in Sweden before Norway

After the sharp fall, Oslo Stock Exchange Director of Communications Catherine Lorvik Sigerlund wrote in an SMS to E24 that she “routinely looks at the movements and what lies behind them”.

On Monday afternoon, Nasdaq, which owns the Stockholm and Helsinki stock exchanges, confirmed that the drop came as a result of the sale of a player in the market.

Stock exchange owner wrote in message.

According to Norwegian CEO Anders Skar at online broker Nordnet, many small savers may have lost out in the fall, through mechanisms that start car sales when individual stocks drop enough.

to Swedish Radio Maria Landborn, chief strategic strategist at Danske Bank, explains what might happen:

– Someone placed a large volume sales order on a “basket” of several hundred large Swedish companies, at the same time the person entered a very low selling price.

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Impact of the infection on Norway

After the stock market crash, Nordea investment manager Robert Ness described the whole thing as a “little puzzle”:

– The market went down suddenly in Sweden without news, so there might be someone who made a mistake or made a wrong deal there, he said.

– So in the Oslo Stock Exchange this is likely to be a contagious effect, and this is the only explanation I have, he continues.

DNB Markets equity strategist Paul Harper also questions the stock market crash.

I haven’t seen any titles that offer any good explanation, he says.

Stock strategist Paul Harper at DNB Markets

He points out that markets other than Norway have also fallen sharply.

– It’s simply very strange. It’s hard to come up with a good explanation, says Harper.

– sausage fingers

– It must be a fat finger (sausage finger, memo.) or some algorithm that has gone unruly. History shows that this is usually what happens when you get such brutal price drops within a few minutes, Marius Borthen, director of Blueberry Capital, said immediately after the incident.

Borthen points out that development returned to normal after a very short time.

– only confirms that it was not caused by an external event, says Borthen.

Supported by Olaf Chen, Head of Global Pricing and Pricing at Storebrand Asset Management.

– This looks like a traditional fat finger, where you made a wrong order or a large order. The movement and recovery indicate that, Chen says.

The correction was the largest in the North, a little smaller in Europe and not as big in the US futures. This also indicates that such an error occurred, he adds.

Olaf Chen, Head of Global Pricing and Concern at Storebrand Asset Management.

There were probably some quantitative funds that had some algorithms that stimulated a lot of sales, and then no volume to receive orders. Then the stocks go down, according to Borthen, and add:

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– It was particularly liquid stocks, including Schibsted and Orkla, that had to continue as the share price fell nearly 10 percent.

Borthen notes that large quantitative funds are in London and New York.

There is more and more “leverage” (mortgages, derivative contracts, journal.anm.) in the markets now. Helps create more imbalance. It certainly won’t be the last time we see that, especially with the high valuation and the ever-weakening macroeconomy.

– There are no indications of errors in the Oslo Stock Exchange systems

Finanstilsynet tells E24 that they are in dialogue with the Oslo Stock Exchange.

– There are no indications of any errors in the Oslo Stock Exchange’s systems, says division director Thomas Borschgrevink in the Market Behavior Division.

– It seems that this happened all over Europe. The incident appears to have started in markets other than the Oslo Stock Exchange, he says.

Across Europe, there were also sudden but less dramatic declines. The Frankfurt Stock Exchange was at its worst, down just over 2 percent, but it has cut the decline by more than half at the time of writing.

Read also

Finanstilsynet about the shock at the Oslo Stock Exchange: – It seems that it has started in other markets

Experts are scratching their heads

Stock experts are out on social media and reacting to the sudden volatility.

“Well, a bit of a sudden crash,” investment economist Mads Johansen wrote in NordNet.

– It appears to be a “sudden collapse” across the Nordic countries. The market has corrected again. I don’t know what drove it, but it was some wild minutes, Danske Bank’s chief analyst Mikael Olai Milhøj wrote on Twitter.

The term “quick crash” is a term that refers to the rapid declines in the stock market, and has recently become synonymous with the rapid declines that sometimes occur when stock trading algorithms withdraw all of their buy orders.

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This isn’t the first time something like this has happened, says Nordea Leaf investment manager Liv Ron Ren, noting the rapid crash in the US in May 2010. Then, among other things, Procter and Gamble plummeted 30 percent in seconds, Accenture stock fell 99, 99 percent before the market recovered.

– As far as I know, we didn’t get a good explanation later on what happened next. There were many rumors about sausage fingers among traders at major banks in the United States and about algorithms that were unruly. Ryan says it’s not certain we’ll get a good answer for this either.