December 1, 2022

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- Start reaching levels where you can see the pace a bit - E24

– Start reaching levels where you can see the pace a bit – E24

New interest rate increases in the US and Norway are some of what you can expect from a busy economic week ahead. At Oslo Børs, the results season continues with Aker in the lead role.

The US central bank, led by Federal Reserve Chairman Jerome Powell, is expected to raise interest rates by 0.75 percentage points for the fourth time in a row.
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Interest rate decisions from the US central bank on Wednesday night and the Bank of Norway on Thursday morning are the clear highlights for economists in the coming week. In addition, the Bank of England makes a decision on the interest rate in Great Britain, and inflation figures are provided for the Eurozone, to name a few.

For Norway, economists are divided over whether there will be a 0.25 percentage point increase, Norges Bank announced, or whether the central bank will decide on a stronger-than-usual 0.5 percentage point jump in interest rates for the fourth time in a row.

In the US, the general expectation is that the central bank, the Federal Reserve (Fed), will continue to raise interest rates by 0.75 percentage points.

– If you want to look at the commonalities, it’s still brutally tight. It’s starting to reach levels where you can see the pace a little bit, says Marius Gunsholt Hof, chief economist at Handelsbanken on the overall picture for rate setting now.

Read on E24 +

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– Almost behind us already

Discouraging high price growth remains a central point in central bank interest rate setting. In the US, inflation eased somewhat to 8.2 percent in September, but it came in higher than economists had expected.

The interest rate decision in itself is not particularly exciting for the economist at Handelsbanken. That there will be a so-called Raise the interest rate three timesAn interest rate increase of 0.75 percentage point is referred to as a triple, because it was more common to raise the rate by 0.25 percentage point each time. It is also priced in the market with a high probability, according to Fedwatch CME Tool.

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An interest rate increase of 0.75 percentage point is already almost behind us. What will be even more exciting is whether the Fed will send some warning signals about the upcoming meeting, says Hof.

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The chief economist believes Central Bank Governor Jerome Powell has a balancing act to deal with when interest rates start to rise. If the Fed chief is to give signals that he envisions slowing the pace of tightening, it must be done in a way that does not make the market believe it is about to end, Hoff points out.

– I’m glad I don’t have to stand on the podium and explain it, he says.

Kjersti Haugland, chief economist at DNB Markets, is also very excited about what kind of signals are coming from the central bank.

One will look for signs of resilience, such as how long they want to raise interest rates and how long they’re willing to keep the rate high, Hoagland says.

Enthusiastic about wage growth and workforce participation

A tight labor market with low unemployment and strong wage growth also plays an important role in the central bank’s interest rate policy. On Friday, two days after the interest rate decision, the important labor market report “Non-Farm Payrolls” was released.

In September, 263,000 new jobs were created outside the US agriculture sector, which was slightly higher than expected. The unemployment rate fell to 3.5 percent, wage growth fell to 5 percent as expected, and labor force participation fell marginally to 62.3 percent.

Hof particularly highlights wage growth and labor force participation as important numbers to watch when the October report is released on Friday.

There could be another 0.75 percentage point increase in December if there is still a tight labor market.

In advance, economists expect that 190,000 new jobs will be created in October, unemployment will rise to 3.6 percent, wage growth will moderate to 4.7 percent and the labor force participation rate will rise slightly to 62.4 percent.

I think housing prices will continue to fall

Thursday mornings can be hectic for those interested in the Norwegian economy.

The Norges Bank will make its rate decision at 10 am, then Central Bank Governor Ida Waldenbach will hold a press conference, which is unusual for so-called interim meetings where no new forecasts are presented.

Then we’ll find out what house prices were like in October, when Eiendom Norge presents its house price statistics. In September, house prices fell by 2.2 percent in this country, and, adjusted for seasonal changes, prices fell by 0.6 percent.

– Perhaps there was a change in mood. There was a clear change of pace in September, and it is natural to think that prices continued to decline in October, says Kjersti Haugland, chief economist at DNB Markets.

It was described by Eiendom Norge as a sharp drop in prices, although it is common for prices to drop towards the end of the year.

September may have been a turning point, and prices may have fallen a little more quickly in October. We believe in a 0.5-1 percent seasonally adjusted decline in October, says Handelsbanken’s Hof.

Turbidity in the results of fire

By no means will there be silence on the part of the companies in Oslo Bors when the earnings season begins in a new week.

Several companies in Kjell Inge Røkke’s Aker system will provide third-quarter figures during the week. Aker Carbon Capture opens the ball on Tuesday, before green investment firm Aker Horizons delivers results on Wednesday. Then the mother ship Aker wraps up results week results on Friday morning.

Read on E24 +

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Car charging is also included in the program. Carriers Wallenius Wilhelmsen and Gram Car Carriers release the numbers on Thursday and Friday, respectively.

The car charging market has seen a massive recovery after several years of trying times, as E24 reported earlier this fall. Peter Hoggin, an analyst at ABG Sundal Collier, said at the time that he believed the strong market would continue. Another car shipping company on the stock exchange, Høegh Autoliners, presented quarterly numbers last weekThat showed a sharp improvement in earnings of $91.9 million.

Meanwhile, the stage is set for more flying when Flyr releases its third-quarter results on Thursday. The airline announced earlier in October that it would save about 400 million this winter, among other things, by cutting Norwegian routes to a minimum and laying off staff.

Kahoot, Europris, Scatec and DNO are also among the companies that announced numbers on Thursday.