The ride is cold in the stock market. It is feared that central banks will raise interest rates too much and the war started by Russia in Ukraine will have new rounds.
How long will the decline in the stock markets last?
“I could see that there is still a lot of negativity to come, which has not yet been taken into account,” he says Danish Bank senior strategy Kaisa Kivipelto In the recent broadcast of the Market Council.
It is difficult for him to say how much the market will still fall.
“It is not yet known exactly what the profit growth outlook is next year, and it is not known whether the central banks will succeed in braking (the economy) appropriately, neither too much nor too little.”
The market will only touch the bottom when all future negative developments have been taken into account, he reminds.
“In my opinion, there is still some way down here, unfortunately.”
“A two percent interest rate is healthy”
Key interest rates have been raised rapidly in the United States to around three percent and in the euro area to 1.25 percent.
Nordic senior strategy Dear Alava estimates that key interest rates may rise by another 1.5 percentage points in the US and Europe. There has already been so much increase in market interest rates that there is clearly less room for growth there.
Kivipelto considers that all interest rate increases could be priced at market rates in the next 3-4 months.
“On the other hand, we have been surprised many times during the year in terms of inflation,” he adds.
The jury reminds us that there is absolutely no way to talk about very high interest rates yet.
“We have to get used to the fact that we have interest on the market. An interest rate of two percent is probably a healthy situation”, reflects the sales director for private customers Camilla Karlberg from Aktia .
The war continues for a long time and blurs the outlook
However, the risk of too strong interest rate hikes is real, says Kivipelto.
“The central banks were late with the interest rate hikes. They now have to save face and therefore play a hard game. In order to maintain credibility in the market, the message must now be really strict.”
“There has been a ten-year party going on in the investment market. Now we are returning to a normal situation, maybe a little too hard, as if we had jumped to the 1970s: energy crisis, inflation and geopolitical tension.”
It is estimated that the war will continue for a long time, which significantly clouds the outlook for the market: the energy crisis could hit Europe even worse.
“Now we are relying on the hope that the winter would not be very cold, that it would rain and wind a lot. There is a clear risk that energy will have to be rationed, which means closing production facilities,” says Nordean Alava.
“This situation is by no means easing up quickly.”
Source: Arvopaperi by www.arvopaperi.fi.
*The article has been translated based on the content of Arvopaperi by www.arvopaperi.fi. If there is any problem regarding the content, copyright, please leave a report below the article. We will try to process as quickly as possible to protect the rights of the author. Thank you very much!
*We just want readers to access information more quickly and easily with other multilingual content, instead of information only available in a certain language.
*We always respect the copyright of the content of the author and always include the original link of the source article.If the author disagrees, just leave the report below the article, the article will be edited or deleted at the request of the author. Thanks very much! Best regards!