Gå til søkefunksjon Gå til innhold

Du må bruke en annen nettleser. For å bruke våre webtjenester kan du isteden bytte til en av disse nettleserne: Apple Safari, Google Chrome, Microsoft Edge eller Mozilla Firefox. Les mer om anbefalte nettlesere.

Market Outlook: Inflation worries behind market turmoil

Hopes of a strong economic recovery – mixed with worries about inflation, rising long-term bond yields and reports of increased COVID-19 transmission – have led to volatile financial markets. On March 8 the downturn in America's tech-heavy Nasdaq Composite surpassed 10%, signifying a "correction". But on March 9 (yesterday) the index rebounded to only about 7% below its mid-February peak.

Financial markets remain volatile after Fed chairman's speech

Jerome "Jay" Powell, chairman of the US Federal Reserve, disappointed financial markets in his remarks to a Wall Street Journal forum on March 4 by not clearly expressing concern about the recent upturn in long-term US Treasury yields. Although the Fed keeps repeating its message that its key interest rate will remain near zero and that any temporary inflation surge will not be allowed to change this, more is needed to prevent long-term yields from climbing. Nor were markets calmed by US Treasury Secretary Janet Yellen's statement that she foresees a strong economic recovery in the United States without excessive inflation.

Strong Chinese exports and new targets

Chinese exports rose by 60% in February compared to the same month of 2020, which was far stronger than the expected 40% gain. During this past week, China unveiled new growth targets for 2021: a 6% expansion in the economy and creation of 11 million new jobs in urban areas. Premier Li Keqiang also launched a new five-year plan for achieving self-sufficiency in critical technologies.

Oil prices climbing further, but unchanged OPEC+ production levels

Last week's meeting of OPEC+ (the OPEC oil cartel countries plus Russia and other key non-OPEC producers) resulted in a decision to keep output levels unchanged, confounding market expectations that OPEC+ would raise production by up to 1.5 million barrels per day. The announcement pushed up the price of Brent crude by 5%. Higher oil prices, along with rising prices for many other commodities, will put additional upward pressure on inflation and inflation expectations in the coming months. Brent oil prices spiked at about USD 71 per barrel after last weekend's reports of drone attacks on Saudi Arabian oil facilities by Yemen's Houthi rebels, but then fell again to around USD 67.

Biden's American Rescue Plan one step closer

The United States Senate voted 50-49 in favour of President Joe Biden's USD 1.9 trillion stimulus programme after making various amendments, sending it back to the House of Representatives for final approval. Most indications are that the package will soon receive Biden's signature and go into effect.

Swedish housing market continues to heat up

Two days ago SEB published its Housing Price Indicator for March. The percentage of households who expect rising home prices during the next 12 months increased from an already high level. The indicator gained 4 points and stood at 61, its highest since mid-2017 and only 10 points below the record in 2015. The survey also shows that the percentage of households that plan to expand their mortgages is climbing, while more and more households say that they plan to fix their variable mortgage rates. The strength of the housing market is confirmed by actual prices, with statistics from estate agents indicating continued price increases in February, mainly driven by single-family homes.

Our market view

Recovery will support stock markets

A continued rise in long-term US Treasury yields has worried some stock market investors, leading to turbulence on most major exchanges in recent weeks. In itself this is not surprising, since last year's sharp stock market recovery provides reason for caution. We are sticking to last week's cautiously optimistic view of stock markets.

In our main scenario, we anticipate a clear economic recovery starting this spring or summer, with solid growth at least well into 2022. Due to a combination of continued large stimulus measures and an accelerating economy, inflation risks are emerging on the agenda and thus also worries about a continued climb in government bond yields, especially in the US. We expect only limited upturns in yields, but if they turn out to be faster and larger than this, they may have a negative impact on the stock market mood.

In an economic recovery, cyclical value companies should be able to regain some lost ground, but looking further ahead the digitisation trend will continue to benefit growth companies. Sizeable worldwide investments in sustainability suggest that last year's strong performance for companies with this type of strategy may continue.

Share valuations today are undoubtedly high from a historical perspective but can be justified by lower interest rates and bond yields as well as a strong earnings outlook. These high valuations limit upside potential in the long term, but they are rarely a good signal to sell in a short-term perspective.

Continued potential, though a lot has been priced in

Given today's low interest rates and yields, it is hard to find good alternatives to stock market returns. Meanwhile, central banks and governments have established a floor by promising continued stimulus.

This suggests that the growth picture will have to become much worse, and/or yields will have to climb much more than expected, for major stock market downturns to materialise. However, profit-taking − with downturns of 10 or perhaps 15 per cent − will still be a natural element of this picture. We nonetheless expect positive, single-digit stock market gains this year.