New jobs numbers from the United States and focus on the implications of the Federal Reserve Chairman’s speech.
– After Powell’s speech on Friday, the market fell significantly. It was as if the market took in what Fed members tried to say last month, says Danske Bank’s chief strategist, Anders Johansen to E24.
On Friday, the head of the US central bank, the Federal Reserve, Jerome Powell, warned that there will be some “pain” ahead in the fight against high inflation. He promised that the Fed would aggressively use the tools at its disposal.
Powell’s speech sent Wall Street’s main indexes straight down, and Johansen believes Europe will feel the pressure next week.
– Good news is bad news. If there are good numbers, it is negative for the market, because then the interest rate will have to be raised even more. It will be interesting to see the development, but I think we will turn to see that US interest rates will rise further if the overall numbers surprise positively, Johansen says.
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A pent-up stock niche?
“The most important number of the month”
Johansen highlights two particularly important things that will happen next week: ISM numbers and labor market numbers.
ISM is a survey among Purchasing Managers in the USA, which gives an indication of the developments in the industry.
– We have seen that many PMIs have differed recently and it will be interesting to follow what the ISM has to say. If it shows that the US economy is doing well, the market thinks the interest rate is likely to rise further, Johansen says of the ISM numbers.
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Don’t be fooled by the total numbers that cause fluctuations in the stock market
Labor market numbers, often called nonfarm payrolls, show the number of new jobs created outside of farming in the United States in the past month. These are published on the first Friday of every month and are often referred to as the “most important numbers of the month”.
– They’re not very good at making changes, so that would be exciting again, says Johansen.
A month ago, the numbers were a big surprise. In advance, economists expected the number to be 250,000. However, the result showed that an additional 528,000 people entered work in July.
Analysts, on average, estimate the August numbers to be around 300,000, according to Bloomberg.
US job numbers surprise: 528,000 jobs were created in July
Sit quietly in the boat
Sky-high inflation and rising interest rates are making markets nervous. Technology stocks in particular are sensitive to concerns about rising interest rates because they are often priced based on expected earnings in the future.
At Oslo Bors, the quarterly figures come from BW Offshore, Adevinta, Odfjell Drilling, Norway Royal Salmon and Seadrill Limited.
For those wondering what to do in the stock market, Johansen has a clear message:
– If you’re in the stock now, sit quietly in the boat. Do not make any major changes. If you haven’t invested before, take a chance when the market is down, but make a plan, he says, adding:
It would be foolish not to participate in the inflation we are witnessing now. Stocks perform better than bonds and bank savings over time when inflation is high.
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