The heavyweights such as DNB and Equinor fell on the Oslo Stock Exchange today, and thus contributed to a decline of as much as 3.19 percent to 799.68 points.
The decline not only weighed on the main index in Oslo, which has fallen by almost 8 per cent in the last week.
The stock market day in Europe was also marked by red numbers, and the leading indices in the US pointed downwards at closing at 21 Norwegian time. It was the worst trading day on Wall Street since June.
This is what it looks like in the US at closing time:
- The Nasdaq technology index fell 3.73 percent
- The S&P 500 index down 3.52 percent
- The Dow Jones industrial average fell 3.43 percent
– There are several factors, but it is especially the increase in corona infection now in recent days. Several countries are now considering tightening the lockdown measures, equity strategist Paul Harper in DNB Markets explains to NRK.
Concern for corona tightening
CNBC writes that the news of new corona tightening in Europe has a negative effect on the markets.
– I think previously that it has been assumed that this was under control, but now it is seen that there is a greater danger that economic activity will be affected over a longer period, he says.
When investors think the corona will hit the economy and economic activity, they are worried that listed companies will have poorer earnings. It is reflected in the courses, according to Harper.
For not only Norway has introduced stricter measures as a result of the current infection situation in the country.
Corona experts have asked French President Emmanuel Macron to close the country. In France, 523 people died of covid-19 during Tuesday. This is the highest number of deaths in one day since April.
– Can be messy for a while
Both France and Germany announced on Wednesday strict closures to control the corona infection. In France, it will not be possible to travel across regions. In Germany, restaurants and bars are closed.
This is how the day ended on the European stock exchanges:
- Dax in Frankfurt fell 4.17 percent
- CAC 40 in Paris down 3.21 percent
- IBEX 35 in Madrid fell 2.59 percent
- FTSE MIB in Milan down 4.06 percent
- FTSE 100 in London down 2.55 percent
When the world closed in March, markets around the world responded with blood-red numbers. Then came an unexpected upswing.
– The market turned around when the authorities came up with large support packages, and then it built up an expectation that the corona situation was under control. Now you are less sure that the situation is under control anyway, says Harper.
– I’m in the stomach
He believes that market instability may continue in the future:
– I think it can be confusing for a while, because it is difficult to calculate the development of the virus situation. Even if you start with further measures now, it takes time before you see the results, says Harper.
Investor and manager Jan Peter Sissener is, as often, optimistic. He predicts that the nervousness in the market will disappear.
– When the interest rate is zero, it does not matter much if you get money now or in six months, or twelve months. Therefore, I think you should have ice in your stomach, sit still, buy real shares if you have liquidity, be prepared that it can drive a little to the nervousness and almost panic that was on the stock exchange today, Sissener says to NRK.
Soon elections in the United States
Prime Minister Erna Solberg said last week that she hopes a vaccine is in place in the first half of next year.
– I think the day you announce that a vaccine is available, then the stock exchanges will go a lot, Sissener says.
Both Harper and Sissener also highlight an event that is fast approaching. Next week there are elections in the USA, which can create extra uncertainty in the markets.
– It has been a factor for several days as we approach the election so there will be more focus on it. Joe Biden and Donald Trump have different presidential styles, and then it is difficult to calculate the outcome in the market when you do not know what the result will be, says Harper.
According to a factor that can influence the stock market in Oslo, who becomes president of the USA:
– It really affects the whole world, because the American economy is the biggest driving force in the world economy, so then it affects the oil price and risk appetite globally.
Oil prices down 4.04 percent
American politicians are negotiating an economic rescue package that has been postponed because the parties have not reached an agreement. There is uncertainty about whether the package will come to the table before the presidential election on November 3, writes the New York Times.
– How big that package will be, when it will arrive and so on. The fact that they have not agreed has been something that has characterized the market for a while, says Harper.
The oil price has also pointed downwards this week. At the close of trading on Wednesday, a barrel of North Sea oil was traded for 38.94 dollars a barrel, down 4.3 percent.
Since then, the oil price has risen somewhat. At 21:20, the oil price is down 4.04 percent.
– The oil price is characterized by expected demand, so if there is lower activity in the economy then the demand for fuel decreases, says Harper.
The stock exchanges in Asia are open at night Norwegian time. On Wednesday night, the main indices in Japan and Hong Kong closed down, while Shanghai and South Korea’s indices experienced an upturn.