The Russian attack on Ukraine affected the Oslo Stock Exchange and raised the price of oil on Thursday, but on Friday everything was reversed – after the West responded with sanctions against Russia.
The main index closed up 0.99 percent on Friday afternoon.
Although Borsen hasn’t really changed over the past couple of days, DNB Equities Director Torje Gundersen mentioned that the market is volatility well, and that there is more to it than usual.
– It’s hectic, and there’s a lot of information to process. Now it’s about looking into the details of the sanctions, and then trying to form an opinion on whether they will affect the growth and inflation expectations we had before the crisis started.
As it stands now, the sanctions appear to be targeting largely individual individuals and companies, and not on a large scale as had been feared. In addition, the West appears to want to spare energy markets, says Gundersen.
oil and gas
Oil and gas prices were at very high levels throughout the fall and winter, making new gains after the Russian invasion. The brokerage ABG Sundal Collier this week raised its earnings estimates for oil and gas companies on the Oslo Stock Exchange by 20-40 percent.
– When it comes to stock exchanges around the world, the Oslo Stock Exchange stands out in particular, as we have a heavy oil sector. Then you have the oil service that has a huge impact on it, as well as their strong fish market prices. Plus, you have companies like Norsk Hydro that are making good profits from higher aluminum prices, says hedge fund manager, Karl-Oskar Ström.
Equinor is down 5.44 percent at closing time, while BP is down 4.81 percent.
DNB’s Gundersen says that rising energy prices are unliveable over time, because they weaken the purchasing power of consumers and businesses and lead to lower economic activity.
An oil price over $100 is a fairly strong tax for most businesses and consumers around the world. He says that extremely high energy prices and the prospect of rising food prices pose a threat to the global economy.
– Have you thought where the pain line goes?
We may have crossed the pain threshold by now. If the prices we have now continue, we’ll have to lower our growth forecasts significantly, but futures contracts point to lower prices going forward, he says.
The market is still full of challenges
Fearing an escalation, Gundersen chose to keep an ordinary share of stock in the fund.
We had a picture of growth and inflation that we thought should be positive for stocks, but then we took that inconsistency into account and opted for a more cautious approach. We still have that, while we analyze a very uncertain situation, he says.
The stock market is down 1.3 percent so far this year, and Gundersen thinks it’s possible to finish 2022 in the additional period.
– And most importantly, you do not sell in a panic, since it has already fallen sharply. If you look at historical wars and conflicts, you will find that the market is already higher after a month. The prerequisite has to be there to have a perfectly good engagement year, since we’re getting an escalation cut. He says underlying conditions are actually looking good, despite the high interest rates.
Strom was surprised that US stock markets rose sharply during Thursday evening, and believes that the market has done nothing but recover from the fall of the previous day.
We are still in a challenging market. The crisis will directly affect the markets through fear and insecurity, but some of the impact was due to the fact that Russia has now attacked. The full extent of this is not yet known, so there will be an increase in the risk premium anyway, he says.
Strom reminds us that in addition to the Ukraine crisis, we are also on our way out of the pandemic, with inflation rising and interest rate increases announced.
Technology stocks, for example, have pulled far above the trend, and haven’t fallen again yet. That’s part of the problem – there are still very expensive stocks in the market where growth may slow and interest rates go up. There’s a little you can select in the ‘Things will get better’ column now, but that’s something you just have to work through. In the very short picture, I think we will have a positive development in Europe.(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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