Global stock markets are being dragged lower by deleveraging and downward revisions to company profit forecasts but should regain their balance, France's Economy Minister Christine Lagarde said on Monday. Shares around the world reeled on investor fears that further possible co-ordinated action to calm markets would not be enough to fend off a global recession.
"There is a ... movement of disengagement from alternative funds, which are getting rid of a certain number of shares, and on the other hand there are expectations of lower growth, especially in the United States, and generally in the world," she told reporters during a visit to southern France. Those growth fears had spurred investors to lower their profit forecasts for companies in which they had invested, which was affecting their investments, she said.
"I think there is a moment where we will recover an equilibrium," she said. Lagarde repeated her satisfaction with the beginning of a thaw in interbank market tensions. "Interbank rates which were frozen are in the process of becoming unblocked, falling a little, and this in a regular way over the past 15 days," she said.