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– It was a quick comeback. Both the economy and corporate earnings and stock prices have fallen faster than was the standard expectation, says chief strategist Peter Hermanrud at Sparebank 1 Markets to DN.
On Monday, February 24, gravity hit the Oslo Stock Exchange. A few days earlier, the main index had reached 942.89 points, less than one point from the “all-time high.” The prevailing market view was that China was in the process of controlling the coronavirus.
But over the weekend the news came of the first corona deaths in Europe. 152 people were infected in Italy and three were confirmed dead. The Oslo Stock Exchange fell more than four percent, which was the steepest decline in the stock market since the summer of 2016.
– I think this is the beginning of a correction, Pål Ringholm, head of credit analysis at Sparebank 1 Markets told DN.
He was absolutely right. The following month, the coronavirus and harsh infection control measures eradicated huge stock market values across Europe. the main index fell 30 percent and touched 635.93 points at the end of March.
What no one talked about in March
Then the return began. In recent months, world stock markets have made up for what they lost. On Friday, the trip had reached the Oslo Stock Exchange and the main index surpassed the level before the stock market crash with a final price of 946.3 points. November in particular has been very strong with an increase of more than 16 percent after a series of positive news from vaccine manufacturers.
– In recent weeks, there have been reports that vaccines may be implemented much faster than expected. There is now speculation whether we will be able to return to normal once in the second quarter, Hermanrud says.
The chief strategist believes that the biggest market drivers are not just vaccine news, but also that third-quarter company reports were much better than previously thought.
– It has to do with the economy. People spend less money on services and more on goods. There are not many companies that serve on the stock market. Sales of goods have increased considerably. No one talked about it in March, but in hindsight it’s pretty obvious, he says.
– What lessons can you learn from this stock market crash?
– The lesson is always that you have to spend the bad times shopping.
Hermanrud himself failed to take advantage of the cheap stock market.
– I haven’t done anything special. It was such a short period of time that it was really cheap. I usually say to buy when the price / book is below 1.5. It lasted so little that there was no time to adjust.
“Things can always go wrong”
The main index of the Oslo Stock Exchange is now only 0.3 points from the “all-time high”. Hermanrud is not sure if the Stock Market will go much higher.
– There is not much to go on, so I do not think it will escape. At the same time, I don’t really see what will change it either, he says.
– Do you see any danger signs?
– Things can always go wrong. The market depends on keeping interest rates low. Failure to do so will leave the market vulnerable.
– After the “all-time high”, 1000 points will be the next milestone. When will that happen?
– Hardly this year, but it is very possible that it will happen in the new year.
Going forward, Hermanrud believes that news like vaccine approvals or reports on how many vaccines are being rolled out, in addition to key financial figures, will drive the market. When Biden enters the presidency in January, there will also be tension over what he wants to prioritize, the chief strategist believes. (Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content can only be done with written permission or as permitted by law. For more terms, see here.
