Oil stocks bring Oslo bors down to new low: - Tense mood as war winter approaches, official says

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Oslo Poor’s finished last week with a sharp fall of 2.43 percent. The main index fell more than three percent for the week, and the stock market followed the rest of the European market, which was also marked by a broad decline.

On Monday, the main index on the Oslo Stock Exchange opened down 0.63 percent. Over the course of the trading day, the mood worsened further, and the benchmark is now down about 3.5 percent.

Since its peak in May, the main index has fallen more than ten percent, and on Monday the index will reach its lowest level so far this year. If the main index ends up falling more than 3.45 percent, it will be the worst day for the stock market so far this year.

The stock market suffered a sharp fall last week, and there are likely to be more turbulences ahead. Especially toward the week’s big events, the straight interest rate meetings, says Principal Christian Tonal at Alfred Berg.

Energy stocks drop

It’s a really blue Monday for the energy sector in Oslo Poor’s, with many heavyweights dropping significantly. Equinor, the largest company on the stock exchange, fell about 4 percent.

Equinor stock is now trading at prices about 16 percent below its historic peak in August. Since then, Equnior shareholders have noticed that the market capitalization has fallen by NOK 200 billion.

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However, the stock price is about 48 percent higher than it was on New Year’s Day, and the company earned three dividend payments during the period.

Kjell Inge Røkke’s oil giant Aker BP fell 7 percent on Monday, while oil company Vår Energi was down more than 8 percent. Offshore wind company BW Ideol is the loser today with a 13 percent drop.

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Like the Oslo Bors, there were also waterfalls across the continent on Monday morning:

The broad Euro Stoxx 50 Index is down about 1.1 percent.
The CAC 40 index in Paris fell 1.4 percent.
The DAX index on the Frankfurt Stock Exchange fell by 0.7 percent.
The Spanish Ibex 35 fell 0.6%.

In the UK, the stock market was closed on Monday due to Queen Elizabeth’s funeral.

Big Attention Week

This week, attention is drawn to a number of interest rate meetings. The most important interest rate announcement for stock markets comes on Wednesday when the US central bank, the Federal Reserve, is expected to raise its key interest rate.

Investors will also be keen to hear everything Central Bank Governor Jerome Powell has to say in the press conference following the interest rate meeting.

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Principal Christian Tonal at Alfred Berg believes that interest rates and energy challenges will remain in focus after the fall. (Photo: Michaela Berg)
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Central banks and high energy prices are creating action, and developments on both fronts will impact the market even more this fall, says Tunal, adding:

– Now autumn is here and there is an enthusiastic atmosphere towards the winter of war. Tonal says the extent to which businesses in Europe can adjust to higher energy prices this winter will also be critical to interest rate decisions. He says.

The Fed should be widely expected among analysts to raise rates by a new 75 points, but the market sees some risk at 100, according to Handelsbanken.

It is completely unreasonable for the Fed to offer any increase of less than 75 points this week. This is also the main expectation among the consensus. But the question is whether the Fed can really increase by a full percentage point, Handelsbanken wrote in his morning report.

Sweden’s Riksbank and the Bank of England will also come under heavy criticism, while the Bank of Norway will hold a rate meeting on Thursday.

First, we expect to raise the key rate by 50 basis points to 2.25 percent. This appears to be widely expected among analysts, but at the same time we see the interest rate market pricing in a high probability of a rate hike of 75 basis points, says chief economist Marius Gunsholt Hof at Handelsbanken.

This week’s events

Interest rates are the focus this week as central banks in many of the world’s largest economies hold interest rate meetings.

Tuesday:

– USA: housing construction in August:

US housing starts are expected to decline further month-on-month in August, to a seasonally adjusted annual rate of 1.433 million units, down from 1.446 million units in July. The number of new home building permits is also expected to decline to 1.615 million from 1.685 million in July.

Wednesday:

– USA: Interest Rate Notice

The US key interest rate is expected to be raised by 75 basis points for the third time in a row, to 3.25 percent. DNB Markets believes that “point” estimates will indicate that interest rates are peaking at a much higher level than reported in June. The brokerage also expects members to significantly raise their inflation expectations, both in 2022 and 2023. However, this is likely to be closer to the current market rate, and should not change interest rate expectations significantly. The brokerage also expects unemployment expectations to rise somewhat, while GDP growth is expected to be revised downward.

Thursday:

Japan: Interest Rate Announcement

Economists polled by Bloomberg News expect the Bank of Japan to continue to be the “different central bank” and keep its key interest rate and monetary policy unchanged at its rate meeting. Among the 49 economists asked, no changes in monetary policy are expected. Economists write, however, that there is pressure on the central bank to do something to address the development of the weak exchange rate, but that this will not come in the form of major changes in general monetary policy.

Norway: Interest Rate Notice

Economists TDN Direkt spoke of their expectation that Norges Bank will raise its key rate by 50 basis points to 2.25 per cent. The peak interest rate is expected to be between 2.00 and 3.25 per cent.

We don’t think the Norges Bank is following market expectations of a three-digit rate hike well. There will be a steeper interest rate path this fall, but no more, and the reason for that is that we are already seeing many signs of a slowdown in the economy, says Harald Magnus Andreassen at Sparebank 1 Markets.

The Norges Bank had lower growth estimates, but the network report was lower and anticipating a drop in GDP, so there is a limit to how much the Norges Bank needs to raise interest rates to keep wage growth in check. Overall, wage behavior has been better than we thought this year, he says.

– United Kingdom: Interest Rate Notice

Danske Bank, in addition to consensus, expects the Bank of England to raise its key rate by 50 basis points to 2.25 per cent. Danske Bank indicates that the market is priced around 65-70 basis points from the central bank, the brokerage believes that the central bank will admit it was fine if it was 50 or 75 basis points, but at the same time the BoE is clearly inclined to surprise the pacific side In his own interest meetings.

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