Our conclusion last week was that we saw a clear probability that Europe and Sweden was ripe for a sommaruppgång and we thought that the Swedish stock market (OMXS30) in the month of July could reach up to our målkurs about 1700 points. Yesterday (Thursday) closed the, however, the Swedish stock exchange on the minus to 1.09 %, while Germany fell with of 1.83 %, the S&P to 0.90 % and tekniktunga Nasdaq with 1,44 %.
The broad US market ended near the high for the year on Wednesday evening with a clear plus sign in the edge. Asia followed in AMERICA’s footsteps, and China, Hong Kong, Singapore, south Korea and Taiwan showed the same behaviour as the US and sniffed at the year’s peak levels during the night to Thursday.
During yesterday unveiled H&M has a surprisingly good report, Telia rose on hopes for major positive changes and the Swedish stock exchange opened as well as Europe plus. Figures on new orders in Germany on the machinery and plants showed an increase of 17% in may (compared with the same month in 2016) with the comment that the demand from Asia, the Eurozone and the domestic market saw better-than-expected.
The EU’s economic barometer rose to 111,1 in June compared with the expected 109,5, preliminary inflationsdata for both Spain and Germany surprised on the upside while U.S. GDP increased by 1.4% in the estimated annual rate, while expectations are low at 1.2 %.
Finally starting the economy to take off in earnest in Europe and then the falling stock markets with engineering – and technology stocks fell in the lead during a somewhat panicky forms. The explanation for this behavior is found in the ultra-light monetary policy from central banks may start to go to its end and even if this should not be news, but rather a matter of course, currency and fixed income markets reacted strongly to this expectations.
In the summer of 2008 you had to pay 1,6 dollars for one euro, and less than seven years later, in march 2015, was almost parity then the price has fallen to 1,03 dollars. After this panicky sell-off in the Euro/Usd in just over two years time gone up and down a stretch bottenformation between 1.03% to around 1,14 and despite countless attempts during this period to break past the upper end of the range, these have inevitably failed until now.
During april and may of the current year, the euro strengthened from 1.05 to 1.13, had the strength to maintain the greater part of this rise, the bet is thus fixed in the upper part of the range and formed what we call a fulcrum.
The strength of the euro against the dollar has thus been apparent in a few months time. It, however, has shaken the investor community is that the Euro, after a one month consolidation has been moving strongly upwards in the last few days. For the first time in over two years seems the euro seriously be in the process of long-term start trenda upwards against the us dollar. With the above strong makrosiffor in the back also have bond yields in the symbiosis with the foreign exchange development increased clearly although from very low levels.
The continuously diminishing hopes that Donald Trump should be able to implement any significant economic/political measures in the short as well as the increasingly positive sentiment surrounding the economic situation in Europe is thus changing the styrkeförhållandet between the two dominant världsvalutorna.
The currency and interest rate trends that we describe above is not really remarkable, but it occurs in a psychologically sensitive mode after a prolonged period of stock market returns. The european stock exchanges including Sweden, have moved sideways with small moves since the beginning of may and instead (as expected) launch a new uppgångsfas was broken tradingintervallen on the downside, which resulted in herding behaviour and a sell-off in high volume.
Added to this is the development of the tekniktunga the Nasdaq exchange, which is home to the world’s largest companies in this sector, with Apple in the lead. This market got a break down two weeks ago, came back quickly but fell during yesterday’s trading back towards its recent trough, which of course fanned the flames of market uneasiness.
The strained values and good profits to realize both in Europe and the united states, combined with significant currency and interest-rate fluctuations in a psychologically sensitive mode is our explanation for the behavior of the stock exchanges. Our positive assessment on the sommaruppgång in the offing, this has of course backfired, but we do not think we have seen the end of the current stock market upturn when economic fundamentals the de facto point in the right direction.
Asia has lost one per cent during the night and yesterday’s declines in Europe and Sweden took place during the hefty volumes with the breach of important levels, which is why we will be cautious about, however, long-term positive. The reporting period of a few weeks may give the stock exchanges renewed energy, but until the situation cleared and calmed down we’d love to have a decent liquidity, and allow the börsläget klarna and crystallizing. We believe in the new högstanoteringar on the Swedish stock exchange before the end of the year, but for the moment we are taking a clear step back, and wait with concrete predictions until next week.