On Thursday afternoon, the so-called main index on the Oslo Stock Exchange closed down about 1.4 percent. This comes after the US Federal Reserve published the minutes of its December meeting on Wednesday evening.
The minutes show, among other things, that the central bank, often called the Federal Reserve, is concerned about high inflation in the country.
In December, the Federal Reserve announced That they will likely raise the key policy rate three times in 2022. Today, the interest rate is between 0-0.25 percent.
The bank also announced that it will cut its so-called support purchases of bonds twice as fast as previously announced. This is because the US economy is on the mend.
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NRK wrote in December that Norwegian families have doubled their savings since the outbreak of the pandemic, with zero interest rates served as fuel for a sky-high stock market fire.
One of those investing in the stock market is Hans-Jørgen Wagelid (22) of Sandvika in Bærum. Wageld teaches economics and management at the BI Norwegian School of Management in Trondheim, where he is also a member of the Bull Invest financial group.
Hans Jørgen (22 years old) is a small saver with an interest in stocks
Photo: Udon Torsdalen
For Hans-Jørgen, the broad decline in the stock market came as a result of a long-awaited message from the Federal Reserve.
– Yes, as for what we saw yesterday, I would say that it was. One can at least expect it on the Oslo Stock Exchange, because it is an exchange that is controlled by the markets around it.
Believe in more turmoil
He is no longer concerned about the development in the stock exchange, but personally believes that it would be wise to invest in companies with safe profits today, rather than in uncertain alternatives.
I imagine that many of the companies that are popular with us as small savers are likely to be affected more than we are used to. We are used to the fact that they have gone up a lot, but now it might be wise to look at safer ports and companies that are making profits and have something to show for paper.
At the same time, Hans-Jørgen believes in more market turmoil in the future, and is keeping this in mind when investing his money in the future.
I’m thinking of investing in safe companies that are profitable today. Growth firms are priced in relation to what they will earn in the future, and this will be influenced by current interest rates. When the US Federal Reserve announces that it will raise interest rates faster than initially expected, it will have an effect.
– Oslo Borz is an attractive place for you
In addition to the Oslo Stock Exchange, the three major US stock exchanges, as well as stock exchanges across Europe, responded with a broad decline in the wake of the message from the US Federal Reserve.
US stock markets fell sharply yesterday, and will continue to fall further on Thursday afternoon NST.
Eric Bruce, chief strategist at Nordea, believes the market is concerned about the highly stimulus monetary policy tightening that it is currently pursuing.
The higher the interest rate, the weaker the growth. Interest rates were very low, so saving in stocks was very convenient. When interest rates are rising, it is conceivable that it would be better to save in the bank and instead put the money in fixed income securities rather than stocks.
Eric Bruce, chief strategist at Nordea, believes the market is concerned about the highly stimulus monetary policy tightening that it is currently pursuing.
Photo: NRK
Despite the significant downturn in the stock market around the world, oil prices have remained relatively stable. Today, a barrel of North Sea oil is trading at just over $80 a barrel.
Bruce points to the stability of oil prices as a positive sign of development on the Oslo Stock Exchange.
– It is positive for the Oslo Stock Exchange that the price of oil remains unaffected by the turmoil. So the Oslo Stock Exchange is an attractive place to be.
– So no need to panic?
– No, at least I won’t. There is always more uncertainty about having money in stocks, and it fluctuates much more than having bank deposits, so one should always keep in mind that there may be more volatility, but in the short term I think the stock market will give a good return In the year.
At the same time, small savers are advised to distribute their investments.
– Now I do not think that oil prices will rise much more, so I think it is still wise to spread investments in many different areas and not only the Oslo Stock Exchange, but also the wide international exposure of its shares.
Anticipate major fluctuations
DNB Markets Chief Economist Kjersti Haugland also points to alarmingly high inflation in the US as the cause of the tension in the market.
It’s an expression that market players are now more concerned about the possibility of a sudden policy tightening than one might previously imagine, she says.
Chief Economist Kjersti Haugland at DNB Markets specifically refers to stocks that are valued based on the money they will earn in the future as being more vulnerable to higher interest rates.
Photo: Thomas Wi
Haugland in particular refers to stocks that are valued based on the money they will earn in the future as being more susceptible to higher interest rates.
Technology stocks in particular, stocks that rely on future earnings, are subject to higher interest rates. Here, unusually low interest rates have driven these stocks up for so long, and now the fear of a terrible reversal is here when the rate hike becomes sharp, Hoagland explains.
Expect greater market volatility now with higher inflation on the way.
Yes, now is the time to tighten fiscal and fiscal policy, after some dramatic years associated with the coronavirus. The policy response, which was exceptional, and ensured an unstable development in financial markets that had become accustomed to strong stimuli, must be reversed.
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