Wall Street rose sharply on Wednesday evening, after the US Federal Reserve raised interest rates by 0.25 percentage points from close to zero, while raising interest rates sharply.
In Asia, signals from the Chinese authorities are providing stock markets support for a historic recovery in the stock market, with the Hong Kong stock market now up nearly 15 percent in two days.
The main index on the Oslo Stock Exchange follows with an increase of 1.3 percent from the beginning of Thursday.
The price of oil (burning spot) has risen to more than three percent and is around $100 a barrel.
Approved Acquisition
On Wednesday afternoon, it became clear that the Competition Appeals Board had reversed the competition authority’s decision to halt the DNB’s acquisition of Sbanken. The court’s decision is final and cannot be appealed, which means that DNB will be able to buy Sbanken for NOK 11.6 billion.
This is the news we’ve been waiting for and hoping for. DNB CEO Kjerstin Braathen said DNB and Sbanken already have a lot in common, and we look forward to showing customers what we can do together.
DNB shares are up more than 2 percent since the start of Thursday. On the other hand, Sbanken’s stock rose nearly 18 percent to a price of NOK 105.
– Realize that they ended up behind
Where a majority on the Federal Reserve’s interest rate committee at the end of last year thought the key rate would be between half to one percent at the end of the year, a majority now thinks the key rate will be around two per cent. In this case, that would mean six more interest rate increases in 2022.
This is certainly an admission that the Fed understands that it has fallen behind with interest rates to bring inflation down to the 2% target. There’s a reason the adjustments are the same, Swedbank chief economist Kjetil Martinsen told DN Wednesday night.
After several years of expansionary monetary policy and a pandemic, inflation in the US is now at its highest level in more than 40 years. Federal Reserve Chairman Jerome Powell said that due to the Ukraine crisis, it will take longer to reduce inflation than initially thought, due to increased pressure on energy and commodity prices, as well as supply problems.
Fed members now expect inflation of 4.3% in 2022, up from 2.6% in December. It’s not until 2024 and beyond that the Fed expects inflation to fall below 2.5 percent.
The Federal Reserve has not come up with a specific date for when it will start reducing the balance sheet, which has reached 9,000 billion dollars, but Powell mentioned that the reduction may start at an “upcoming meeting.”
– It will take some time
It swung well on Wall Street yesterday, but the Nasdaq eventually ended up close to four percent. Paleo Capital hedge fund manager Karl Oscar Strom expects the turmoil to continue.
We are moving away from highly stimulus monetary policy, and the cost of capital will rise. This is done in a situation where inflation is very high and the real interest rate is negative, so there is still cheap money out there, but you will obviously notice a difference in this. When the sun sets, days will slowly but surely become shorter, says Strom.
Higher interest rates mean more expensive loans, which is generally negative for stocks.
Profit margins, which are now at record levels, will fall slightly, and growth is likely to slow, especially in the United States. Plus, there’s a war in Ukraine that isn’t exactly driving prices down, says Strom.
According to Ström, his fund has generated a positive return of “a few percent” so far this year, while the energy-rich Oslo Stock Exchange is up 1 percent in the same period. On Wall Street, the leading S&P 500 index fell more than nine percent.
It will be a harsh climate in the future, and it will take some time before it improves significantly.
Ali Baba to Heaven
After a period of great decline, it happened Asian stock markets have seen a sharp recovery in the last couple of days. The rally comes after reports that Chinese authorities will boost stock markets and end investigations with internet companies.
On Thursday, the Tokyo Stock Exchange rose 3.5 percent and the Hong Kong Stock Exchange 6.1 percent.
Internet company Alibaba, whose stock price fell last year as a result of increased regulation by Chinese authorities, is now up 40 percent in two days.
On the Nasdaq Stock Exchange on Wall Street there is a separate index where you can trade depository receipts of Chinese companies: the “Golden Dragon Index”. Custody certificates are certificates that represent the ownership of shares and are traded in the same way as shares.
The index fell sharply on Thursday, Friday and Monday, but fell as much as 33 percent on Wednesday.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads 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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