On the first trading day of the week, Oslo Bors opened with optimism, but eventually ended with a 0.9 percent drop.
On Tuesday morning, Borsen showed renewed optimism. Five minutes after the opening, the exchange rose from 0.5 percent to more than 0.7 percent.
The pessimism on the first trading day of the week was due to negative updates from the Chinese economy which led to a relatively sharp drop in oil prices. News that Iran would also respond to the European Union’s proposal for a nuclear agreement sent oil prices down significantly on Monday.
On Tuesday morning, the price of Brent crude oil again rose slightly by 0.4 percent, but was still trading near a six-month low, after trading as high as $130 a barrel in the wake of the Russian invasion of Ukraine.
Die Welt: — The drop in oil prices should be viewed in the context of the astonishingly weak numbers from China that came in on Monday night. If the demand in China, that is, one of the largest economies in the world, is lower, then this means something in relation to the prices of raw materials. Therefore, yesterday we also saw a decline in the prices of raw materials in general. How the economy develops in China will be an important point to follow in the future, says Kjersti Haugland, chief economist at DNB Markets.
At 09.05 on Tuesday morning, the spot price of Brent crude oil was at $94 a barrel.
Correlation arrow is down
Norwegian telecom operator Link Mobility Group fell sharply on Tuesday. It happens after the company presented its quarterly report in the morning hours.
The company generated a EBITDA result of NOK 129 million in the second quarter of 2022, compared to NOK 119 million in the same period the previous year. The operating result ended at minus NOK 1.3 million for the quarter, out of total operating income of NOK 1,177 million.
According to the report, the company is adjusting its revenue growth downward on the basis of lower growth in the first half of the year and increased macroeconomic uncertainty. Link also expects weak income growth and increased operating costs in the future.
Just before 12 noon, Link’s stock was down 25.8 percent. At the time of writing, the company’s total market capitalization is NOK 2.9 billion.
MPC Container Ships is also having a rough day on the stock exchange, and by 11.30 the stock was down nearly four percent. Earlier on Tuesday, DNB Markets lowered the target price for the container shipping company to NOK 29.1 per share from NOK 35 previously, but reiterated its buy recommendation.
Gaming company Gaming Innovation Group also presented its second-quarter results in the morning hours on Tuesday.
The figures showed that the gaming company generated operating profit of NOK 23.7 million in the second quarter of 2022, compared to NOK 22.7 million in the same period the previous year. EBITDA ended at NOK 76 million in an adjusted turnover period of NOK 247.7 million.
In addition, he states that the company now expects organic annual revenue growth of about 20 percent and a EBITDA adjusted margin of more than 50 percent through 2024. This has caused market participants to send equity higher, causing That being said, the gaming company’s inventory is up at the time of writing at times by over eight percent.
Stock market optimism
Recently, the stock market in Norway, and globally, has been characterized by cautious optimism. On Monday, among other things, Wall Street closed broadly higher, despite weak macroeconomic numbers from both the US and China.
Alexander Miller, chief investment officer at Odin Fond, believes this is because the market has already taken the negative news into account.
– We get a lot against the fact that there were mostly weak exchanges in the first six months of 2022, which lowered expectations in the market significantly. One could say that it was the lack of very bad news that led to a slight rally in the stock markets.
It also indicates that companies have come up with mostly good quarterly numbers. Miller believes the good numbers have contributed to a “less pessimistic” feeling.
Norway Bank Interest Rate Notice
On Thursday, the stage was set for the week’s big event: the Norges Bank interest rate announcement.
We expect here that there will be another 50 basis point increase, which is more than the 25 basis point increase that Norges indicated is the plan, says Haugland.
Miller is also clear that the question is not whether the central bank will raise interest rates, but by how much.
The reason why Haugland is expecting a 50bp rise is that inflationary pressure is stronger than expected and unemployment has fallen more than expected.
The market has already priced an interest rate increase of 50 basis points, for August and September. It would be surprising to the market if Norges hit 25 or 75 basis points and then we might see price adjustments.
– Do you expect that there may be severe turmoil in the markets after the fall?
– Yes, I expect that. There will be constant speculation about the extent to which interest rates will rise, how complex inflation will actually be, and how vulnerable the economy will be to higher interest rates. The question is whether we will have a soft or hard landing.
record high profits
Norway’s trade balance figures were released on Monday, which showed a record high surplus.
This tells us that export revenue is flowing like never before. On similar occasions in the past, this has led to a round of temporary strengthening of the krone.
When the same thing happened last year, the krone rose by 50 øre against the euro.
In fact, the Norwegian system dictates that income accruing to the state through tax inputs, increased profits and return on direct investments, should not affect the krone beyond what is decided to be spent on the budget, Hoagland wrote in a morning report.
However, the krone could strengthen as a result of increased export earnings. This is because part of the income remains in the currency that is transferred to the oil fund, while part of the income is converted into kroner for tax and dividend payments.
Government krona revenue in excess of what is supposed to cover the oil-corrected budget deficit is converted into foreign currency. If this portion increases, it will not increase the net purchase of the krone. But in practice, the time lag in the corresponding exchanges can cause the krone to be affected, according to Hoagland.
Some of this may already be priced at today’s exchange rate, Hoagland says.
– That is why it is also important to closely monitor gas prices, because they say something about export earnings.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.
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