The week began with new hopes for peace between the US and Iran, which caused Brent oil to drop. On the Stockholm Stock Exchange, the movements were small and then rose around 1 percent on Wednesday when the election results in the American mid-term elections showed that the Democrats took over power from the Republicans in both houses of Congress.
Oil continued to plummet and the mood on the American stock exchanges was cheerful. Both the Nasdaq Composite and the broad S&P 500 index rose 1.5 percent each, and the Dow Jones industrial index rose 3 percent.
But the stock market joy was short-lived. Late in the afternoon on Thursday, the American stock markets suddenly fell, recording the worst trading day since last April when Donald Trump introduced global tariffs. The technology-heavy Nasdaq plummeted 5.5 percent in the AI frenzy, and the main indexes followed suit.
- There are quite a few question marks about what triggered the collapse. Part of it is the discussions around the election fallout and the expansion of AI where there is a concern for tougher regulations, says Swedbank's equity strategist Robert Oldstrand and continues:
- But I think that a lot was primarily about forced sales from various funds that acted with the stock market movements when volatility rose. So it is not a changed fundamental picture that we see, but it is about reducing the risk and then it becomes dramatic when everyone does it at the same time and the market does not have time to receive everything.
Anders Rudolfsson chimes in and believes that this week's macro figures were overshadowed by the AI frenzy. On Wednesday, the Riksbank raised the policy rate as expected to 2 percent. It was the first increase in three years, while inflation fell more than expected according to Thursday's preliminary inflation figures from Statistics Sweden.
- It has actually been a very fascinating week. We already knew before the election that the Democrats want to introduce regulations against AI, and initially the stock market reaction was positive, so it is a bit difficult to understand why the correction came a day later and that it was so strong, he says.
The American stock market crash also brought the Stockholm Stock Exchange with it, which earlier on Thursday was up and sniffing at a new record level. The index closed in the red and also on Friday the stock market continued downward and the week ended unchanged compared to the previous week.
- Since the Stockholm Stock Exchange is not as AI-heavy as the American stock exchanges, Sweden does better when there is a stock market crash like last Thursday when several tech giants crashed, says Robert Oldstrand.
- We remain positive about the Stockholm Stock Exchange after several companies showed very good results during both the second and third quarters. There are good conditions for the stock market to continue upwards from here and end the year strongly. Considering everything that has happened this year, the stock market has nevertheless been quite resilient.
His advice when the stock market shakes is not to sell in a panic.
- Historically, it usually pays off in the long run, even if it hurts in the short term, to continue saving monthly. Things tend to work out and as it looks right now we are not heading into a recession or stock market crash and then it is best not to act in fear but to continue saving long-term, he says.
Seen since the turn of the year, the OMXSPI is up around 9 percent and the large company index OMXS30 has risen 12-13 percent.
- I still think we will see new record levels on the Stockholm Stock Exchange before the turn of the year. The dollar is still stable and the indicators show that the economy is not deteriorating, says Anders Rudolfsson.
