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ECONOMY

Stockholm stock market in record fall

The Stockholm stock market fell 5.2 percent on Monday - the worst fall in nearly three years.

Stockholm stock market in record fall

European stock markets fell across the board on Monday and the US Dow Jones closed down 5.5 percent.

Trading in Stockholm fell as expected on Monday in the wake of the credit rating agency Standard & Poor’s downgrading of America’s credit rating late on Friday.

The day was characterised by turbulence with the initial fall of around 2.5 percent on opening rebounding into positive territory for a while while the market struggled to digest the news from the US.

The fall in the OMXS index by 5.2 percent to 281.9 was one of the largets of the European exchanges.

Peter Karlsson, chief analyst at Handelsbanken, explained the drop in the fact that Stockholm has a higher proportion of companies that are sensitive to the economic cycle.

He mentioned Swedish export-oriented companies such as Sandvik, SKF, SSAB and ABB which are all sensitive to a declining world economy.

Sandvik fell 7.4 percent to 78.50 kronor ($12), SKF fell 6.0 percent to 138.40 kronor, SSAB’s A-shares fell 7.9 percent to 63.30 kronor and ABB was down by 6.2 percent to 131.5 kronor.

Several other manufacturing shares also noted large declines with truck maker Volvo’s B shares down 6.4 percent to 76.60 kronor.

Telecommunication services, consumer durables and banking sectors all performed slightly better than the overall market index. Telecom operators fell 3.8 percent, companies in the durable goods sector fell 3.5 percent and the banking sector was down 4.9 percent.

Clothing chain Hennes & Mauritz was one of the bigger companies that held up best in the stock market free fall. HM’s B shares fell 2.1 percent to 190.50 kronor.

Of the leading European stock markets, the decline was greatest in Frankfurt, which, like Stockholm has many export-oriented and cyclical companies. Frankfurt’s DAX index fell 5.0 percent to 5,923.3, the London Stock Exchange fell 3.4 percent to 5,069.0 and in Paris was down 4.7 percent to 3,125.2.

Political leaders across the globe worked to calm fears with Swedish finance minister Anders Borg assuring households by projecting that no austerity measures will be announced in the upcoming budget.

He meanwhile emphasised the Swedish government’s cautious approach to the crisis, lessons learned from the previous bout of turbulence in 2008.

US president Barack Obama held a speech later on Monday to try to calm the US markets but his words did little to stop traders reaching for the sell button and falls continued unabated throughout the afternoon.

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ECONOMY

‘Tougher times’: Sweden’s economy to slow next year

Consumers in Sweden are set to crimp spending over the rest of the year, pushing the country into an economic slowdown, Sweden's official economic forecaster has warned in its latest prognosis.

'Tougher times': Sweden's economy to slow next year

A combination of record high energy prices over the winter, rising interest rates, and inflation at around 10 percent, is set to hit household spending power over the autumn and winter, leading to lower sales for businesses and dragging economic growth down to just 0.5 percent next year. This is down from the 1.2 percent the institute had forecast for 2023 in its spring forecast. 

“I don’t want to be alarmist,” Ylva Hedén Westerdahl, forecasting head at the Swedish National Institute of Economic Research, said at a press conference announcing the new forecast. “We don’t expect the sort of economic slowdown that we saw during the financial crisis or the pandemic, where unemployment rose much more. But having said that, people who don’t have a job will find it tougher to enter the labour market.” 

She said that a shortage of gas in Europe over the winter, will push electricity prices in Sweden to twice the levels seen last winter, while the core interest rate set by Sweden’s Riksbank is set to rise to two percent. 

As a result, Sweden’s unemployment rate will rise slightly to 7.8 percent next year, from 7.7 percent in 2022, which is 0.3 percentage points higher than the institute had previously forecast. 

On the plus side, Westerdahl said that she expected the Riksbank’s increases in interest rates this year and next year would succeed in getting inflation rates in Sweden under control. 

“We expect a steep decline in inflation which is going to return to below two percent by the end of 2023,” she said. “That depends on whether electricity prices fall after the winter, but even other prices are not going to rise as quickly.” 

After the press conference, Sweden’s finance minister, Mikael Damberg, said he broadly agreed with the prognosis. 

“I’ve said previously that we are on the way into tougher times, and that is what the institute confirms,” he told Sweden’s state broadcaster SVT. “There’s somewhat higher growth this year, at the same time as fairly high inflation which will hit many households and make it tougher to live.”

Damberg called on Sweden’s political parties to avoid making high-spending promises in the election campaign, warning that these risked driving up inflation. 

“What’s important in this situation is that we don’t get irresponsible when it comes to economic policy,” he said. “Because when parties make promises left, right and centre, it risks driving up inflation and interest rates even more, so Swedish households have an even tougher time. Right now, it’s important to prioritise.” 

 The call 

Sverige är på väg mot lågkonjunktur enligt Konjunkturinstitutets (KI) senaste prognos. Enligt finansminster Mikael Damberg (S) är det därför viktigt att Sverige sköter sin ekonomi ansvarsfullt och vågar prioritera.

– Jag tror att alla partier behöver vara lite återhållsamma och inte lova för mycket, säger han.

Mikael Damberg tycker att KI tecknar en realistisk bild av Sveriges ekonomiska verklighet.

– Jag har sagt tidigare att vi går mot tuffare tider och det är väl det som KI bekräftar. Något högre tillväxt i år men sämre tillväxtförutsättningar nästa år samt fortsatt ganska hög inflation som slår mot många hushåll och gör det tuffare att leva, säger han.

Och vad vill regeringen göra åt det?

– Det är viktigt att vi i det här läget inte är ansvarslösa i den ekonomiska politiken. För när partier lovar vitt och brett till allt riskerar vi att driva upp inflationen, öka räntan ytterligare och svenska hushåll får det svårare. Nu måste man våga prioritera.

Se intervjun med Damberg om konjunkturläget klippet ovan.

“Electricity prices are going to be twice as high as last winter,” said 

Elpriserna kommer att bli dubbelt så höga som förra vintern, säger Ylva Hedén Westerdahl, chef för Konjunkturinstitutets prognosavdelning, på en pressträff.
Den lågkonjunktur som KI ser framför sig kallar hon trots det för en mjuklandning. Den handlar främst om att människor kommer att ha mindre pengar att konsumera.

“Brist på gas i Europa gör att energipriserna ser ut att bli rekordhöga under vintern”, skriver KI, och ser att inflationen kommer att närma sig 10 procent.

Deras prognos för styrräntan är att den ligger på 2 procent vid årsslutet, vilket gör att inflationen faller tillbaka snabbt under nästa år och Riksbanken låter då räntan ligga still.

KI tillägger att de offentliga finanserna är fortsatt starka och de bedömer att det finns ett budgetutrymme på runt 120 miljarder kronor för de kommande fyra åren.

Vad gäller BNP spår KI en blygsam tillväxt på 0,5 procent nästa år – en nedskrivning från tidigare 1,2 procent.

Prognosen för arbetslösheten under 2023 är 7,8 procent, 0,3 procentenheter högre än tidigare prognos.

Fredrik Fahlman/TT
Johanna Ekström/TT

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