October 1, 2022

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Oil stocks bring Oslo bors down to new low: - Tense mood as war winter approaches, official says

Oil stocks bring Oslo bors down to new low: – Tense mood as war winter approaches, official says

Oslo Poor’s finished last week with a sharp fall of 2.43 percent. The main index fell more than three percent for the week, and the stock market followed the rest of the European market, which was also marked by a broad decline.

On Monday, the main index on the Oslo Stock Exchange opened down 0.63 percent. Over the course of the trading day, the mood worsened further, and the benchmark is now down about 3.5 percent.

Since its peak in May, the main index has fallen more than ten percent, and on Monday the index will reach its lowest level so far this year. If the main index ends up falling more than 3.45 percent, it will be the worst day for the stock market so far this year.

The stock market suffered a sharp fall last week, and there are likely to be more turbulences ahead. Especially toward the week’s big events, the straight interest rate meetings, says Principal Christian Tonal at Alfred Berg.

Energy stocks drop

It’s a really blue Monday for the energy sector in Oslo Poor’s, with many heavyweights dropping significantly. Equinor, the largest company on the stock exchange, fell about 4 percent.

Equinor stock is now trading at prices about 16 percent below its historic peak in August. Since then, Equnior shareholders have noticed that the market capitalization has fallen by NOK 200 billion.

However, the stock price is about 48 percent higher than it was on New Year’s Day, and the company earned three dividend payments during the period.

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Kjell Inge Røkke’s oil giant Aker BP fell 7 percent on Monday, while oil company Vår Energi was down more than 8 percent. Offshore wind company BW Ideol is the loser today with a 13 percent drop.

Like the Oslo Bors, there were also waterfalls across the continent on Monday morning:

  • The broad Euro Stoxx 50 Index is down about 1.1 percent.
  • The CAC 40 index in Paris fell 1.4 percent.
  • The DAX index on the Frankfurt Stock Exchange fell by 0.7 percent.
  • The Spanish Ibex 35 fell 0.6%.

In the UK, the stock market was closed on Monday due to Queen Elizabeth’s funeral.

Big Attention Week

This week, attention is drawn to a number of interest rate meetings. The most important interest rate announcement for stock markets comes on Wednesday when the US central bank, the Federal Reserve, is expected to raise its key interest rate.

Investors will also be keen to hear everything Central Bank Governor Jerome Powell has to say in the press conference following the interest rate meeting.

Principal Christian Tonal at Alfred Berg believes that interest rates and energy challenges will remain in focus after the fall.

Principal Christian Tonal at Alfred Berg believes that interest rates and energy challenges will remain in focus after the fall. (Photo: Michaela Berg)

Central banks and high energy prices are creating action, and developments on both fronts will impact the market even more this fall, says Tunal, adding:

– Now autumn is here and there is an enthusiastic atmosphere towards the winter of war. Tonal says the extent to which businesses in Europe can adjust to higher energy prices this winter will also be critical to interest rate decisions. He says.

The Fed should be widely expected among analysts to raise rates by a new 75 points, but the market sees some risk at 100, according to Handelsbanken.

It is completely unreasonable for the Fed to offer any increase of less than 75 points this week. This is also the main expectation among the consensus. But the question is whether the Fed can really increase by a full percentage point, Handelsbanken wrote in his morning report.

Sweden’s Riksbank and the Bank of England will also come under heavy criticism, while the Bank of Norway will hold a rate meeting on Thursday.

First, we expect to raise the key rate by 50 basis points to 2.25 percent. This appears to be widely expected among analysts, but at the same time we see the interest rate market pricing in a high probability of a rate hike of 75 basis points, says chief economist Marius Gunsholt Hof at Handelsbanken.

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