Stocks are challenged by credit and bonds

Stocks are challenged by credit and bonds

Thanks in large part to higher oil prices, the benchmark Oslo Poor’s Index is up 5.5 percent on Thursday so far this year, but it hasn’t exceeded 1 percent over the past six months. Because if it were not for the 12 percent increase in the price of oil in the three weeks ending on August 10, Oslo Poor’s would not have given a return of more than five percent in the same period and for 2023 as a whole.

On Friday, the main index opened down 0.5 percent. However, seven of the last 10 trading days are likely to end in a decline for the index.

And in the opening minutes on Friday, only two of the 20 largest companies on the stock exchange are likely to have a positive trading day. It’s very tragic for Autostore shareholders, who at most have seen their values ​​drop by more than seven percent. In the past 10 days, a quarter of the share price has evaporated.

Fossekompani, Scatec and Volue from Arendal are among the companies reporting numbers before the stock market opens that are receiving a positive response from investors. Most other hits drop, like Goodtech, which has a price drop of more than three percent.

towards normal credit

Last week, several people pointed out that it is possible to get risk free returns in the interest rate market at higher than usual levels. Investor Peter Warren, chief economist Stein Brunn, chief strategist Christian Lee and commentator DN Terje Erikstad have commented on the situation in recent days, noting that this could present challenges for the stock market as exchanges may have a stronger competitor in the bond. market.

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And there – in the credit market – lenders are now witnessing that investors are very interested:

– It is really remarkable that the market is very calm, and there are no signs of slowing down. You can see it in the pricing of existing bonds, in the flow of deposits versus withdrawals in funds, you can see it in the interest in new bonds offered by brokerage houses: all factors from neutral to slightly positive, says Ole Einar Stokstad, credit manager at NorseLab.

Stokstad manages funds that invest in debt securities such as bonds. He says credit spreads — the extra interest that investors charge for investing in corporate bonds rather than risk-free fixed-income investments — have been falling lately:

Ole Einar Stokstad in Norcilab.

Ole Einar Stokstad in Norcilab. (Photo: Oyvind Elfsborg)

– There were high credit spreads at the end of last year and the beginning of 2023, back and forth a bit in the spring, and then the spreads fell again. The risk-free interest rates are so high that the total interest rate is high, but it is definitely an open market, and many companies are raising money now.

What do you think of future developments? Should surcharges for credit go up again?

– Our view of the market is completely neutral. There is no shortage of buying opportunities, but there are some sectors that we are more interested in than others. There is no doubt about that. You can see that people are reluctant to consume because of inflation, interest and taxes, so sectors exposed to consumers may suffer, says Stokstad, who also describes commercial real estate companies as exposed.

For oil companies and oil service companies Boom times. We’re a green box, so we don’t buy it, but we keep a record of it running full speed.

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Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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