Norwegian Stock Market Reverses Decline, Oil Prices Fall – Weekly Roundup

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After three consecutive days of decline, the main index reversed on Thursday. Oslo Børs finally ended with a rise of 0.4 per cent, but is still down 2.8 per cent so far this week.

There is no trace of yesterday’s rise at the start of trading on Friday morning. The main index falls 0.5 percent from the start.

Otherwise, the oil price falls marginally to around 83.8 dollars a barrel on Friday morning. On Wednesday, a barrel of North Sea oil was sold for 90 dollars a barrel, in three days the price has fallen by almost ten percent.

The oil price fall was initiated after figures from the United States showed that the American oil stocks had higher levels than expected. Combined with the fear of how interest rate hikes will affect the global economy, oil prices plunged five dollars on Wednesday evening. Since then, oil prices have continued with a moderate fall.

Accelerates after sales agreement

The solar company Otovo rose over 15 percent from the start on Thursday morning.

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The increase comes after the company announced on Friday morning that its wholly-owned subsidiary EDEA MidCo has entered into a sales agreement of up to NOK 700 million.

The agreement concerns the sale of the company’s Norwegian and Swedish subscription portfolios to Forte PV, an investment fund managed by Swiss Life Asset Managers.

Heavyweights adjusted down

The oil and gas companies Aker BP, Equinor and Norsk Hydro had their price targets adjusted down from various quarters on Friday morning.

Goldman Sachs downgraded Equinor to a sell recommendation, with a price target of NOK 340 per share, down from NOK 390, writes TDN Direkt. The share falls 1.1 percent.

At the same time, SEB lowered the price target on Aker BP to NOK 738, from the previous NOK 710 per share. The brokerage house reiterates its buy recommendation, writes TDN Direkt. The share falls 0.1 percent.

Arctic Securities downgraded its recommendation on Norsk Hydro to a sell recommendation. The price target is adjusted down from NOK 55 to NOK 70.

The brokerage expects an underlying ebitda of NOK 4,767 million in the third quarter, which is eight percent lower than the consensus, as a result of lower metal prices and margin pressure within primary metals, according to TDN Direkt.

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“We continue to see a challenging outlook with weak demand and high financing costs continuing to put pressure on the market, despite falling commodity prices,” writes the brokerage house.

The share falls 1.2 percent.

Case before key figures

After a broad rally on Wednesday, the key indices on Wall Street ended slightly lower on Thursday. The decline comes the day before what is referred to as “the most important figure of the month”, also known as “nonfarm payrolls”.

In an interview with DN on Thursday, Morten Steinsland, head of Alfred Berg’s interest rate team, said:

– In the short term, nonfarm payrolls mean a lot. The market has become very sensitive to small news, earlier in the week the market went very high on initially very small numbers, which normally have marginal significance, says Morten Steinsland, head of Alfred Berg’s interest rate team.

On Tuesday came the Jolts report which showed that there were significantly more unfilled positions in the US economy than expected in September. This caused the long-term US government yields to drop, before they fell somewhat after unexpectedly weak employment figures from the HR group ADP on Wednesday.

Since US government debt is seen as a virtually risk-free investment, market participants often buy government debt when there is a lot of fear and pessimism in the market – and sell when there is a lot of optimism. Therefore, the interest rates on government debt become an important measure of expectations and risk appetite in other markets as well, such as the stock market.

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