The turmoil surrounding the banking sector in the US has spread to Europe, and especially the major Swiss bank Credit Suisse. On the stock exchange, the value of the bank falls by more than 25 per cent, after the largest owner has said that it will not support the bank with more capital. Several major European banks fell sharply in value, including UBS (7.8 per cent) and Nordea (6 per cent). In Norway, a little after 1 pm, the picture looks like this: The main index falls 2.9 per cent DNB falls 3.8 per cent Equinor falls 4.3 per cent PGS falls 13 per cent The oil price falls to 76 dollars. The Norwegian kroner weakens against, among other things, the US dollar, Euro and Swedish kroner. – Concern for European banks DNB’s equity strategist Paul Harper says that the stock market falls and the turmoil in the financial markets are mainly due to concern for the major bank Credit Suisse. – Today, there is more concern about European banks, and when confidence first begins to fail, it can happen that people who invest are frightened and sell before they know what is really happening. In the Norwegian market, most things fall quite sharply. The exception is, among other things, defensive shares such as Orkla and Telenor, which rise slightly. These are both companies that are fairly unaffected by the stock market turmoil. – Of all the sectors, banking is one of the most important for the economy. And in the banking industry, trust is important, so that people don’t all try to withdraw their money at the same time, says Harper. The oil price falls on Wednesday and is at most down 3 percent. – I think that it will very likely be turbulent in the future. This becomes a bit like a pendulum that when it swings a lot one way, it can swing a lot the other way as well and it takes time before things calm down again, he says. – Fear that things will go badly Nordea’s chief strategist Erik Bruce agrees with the analysis and says that it is the fear that things will go badly with the banking sector that leads to the big results in the financial markets – There is not a great probability that it will go wrong with Credit Suisse. But there is a fear that things will go badly with the banking sector. What primarily falls are bank shares. The unrest is about what the sharp rise in interest rates we have behind us means for the banks, says Bruce. Bad news about finances hits hard. – Fundamentally, the unrest is due to the banks that collapsed in the US, and the unrest for the banking system. Credit Suisse is a bank that is much safer than the American ones and is subject to European regulations and has good capital coverage, says Bruce. The price rise creates headaches Senior economist Dane Cekov at Nordea says it is not unnatural that the market can fluctuate a lot during stock market turmoil. In addition to the bank crisis, the figures for inflation in the US and France in February have also arrived. The market follows the figures with a skeptical eye to find out how much the central banks need to raise interest rates to cool down inflation. In the USA, prices rose by 5.5 per cent excluding food and energy prices. This figure shows core inflation, which the central bank is trying to bring down to 2 percent by raising interest rates. In France, core inflation rose to 6.1 percent in February. The numbers were slightly stronger than expected, according to Cekov. – This points in the direction of the central banks continuing to raise interest rates. That may have contributed to the return of the stock market turmoil. There is still great uncertainty. There is a lot that investors and market participants have to digest, and they do not always react rationally and correctly, he says. The banking crisis puts central banks in a dilemma. They have planned to raise interest rates to cool the economy, but the market believes that interest rates cannot be raised as much if more banks get into trouble. – We don’t know how this will end. We believe that this will probably go well, but there is more uncertainty than before, and it is not a given that the central bank will raise interest rates as high as was thought a couple of months ago.
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New sharp fall on Oslo Børs – news Norway – Overview of news from various parts of the country
