Our weekly update 2023-02-08

				Click here to read in a browser

Our weekly update Expected announcements and some surprises

What a week! The drama began after the US Federal Reserve’s interest rate announcement last Wednesday, followed by the European Central Bank’s announcement on Thursday − prompting stock markets to jump for joy (more below). But disappointing quarterly reports from some American tech giants and a strong US jobs report dampened the good mood in stock markets a bit on Friday. Summing up the week, in the United States the broad S&P 500 equity index closed 1.6% higher while the Stoxx Europe 600 was up 1.2% between January 27 and February 3. Swedish equities also ended the week strongly, with the OMXS30 index of large cap companies gaining a full 4.4%.

Central bank announcements and a US jobs report
Last week’s obvious highlights were the US and euro area interest rate announcements and US labour market data. As expected, the Fed raised its key interest rate by 25 basis points on Wednesday, and on Thursday the ECB increased its key rate by 50 bps. Although on paper both central banks delivered exactly what was expected, the lack of negative surprises was what the market took note of. The dovish tone from central bank bosses caused stock markets to celebrate, reflecting hope that key rates are close to peak levels.

Unlike the two central bank announcements, last Friday’s US jobs report was a genuine surprise. The employment figure was the one that amazed observers: non-farm payrolls rose by 517,000 jobs, or about twice as many as expected. Unemployment fell to 3.4%, the lowest in 53 years. All this caused investors to reconsider − reviving concerns that both the Fed and the ECB may need to raise key rates further and that it may be some time before we see rate cuts.

Mostly disappointing reports from the tech giants
In the US, there were at least initially reasons to rejoice. Meta (parent of Facebook) published its quarterly results after markets closed on Wednesday and enjoyed a wonderful stock market day, gaining a whopping 23% on Thursday after CEO Mark Zuckerberg promised that further efficiency-raising measures will create a leaner company. Even though other technology companies were also pushed higher by the Meta rally, they unfortunately did not follow up with good news in their own reports. After closing, Apple, Alphabet (parent of Google) and Amazon all announced weak results. Apple missed expectations after anaemic Christmas sales and posted its biggest revenue decline in a fourth quarter since 2016. Alphabet noted lower demand for advertising, while Amazon signalled continued weak consumer demand and also forecast lower growth in its cloud storage service.

The Riksbank’s turn
Later this week (Thursday), it will be time for Sweden’s Riksbank to make its February interest rate announcement. A 50 bp increase in the policy rate to 3.00% is expected. The announcement will also give the new Riksbank governor, Erik Thedéen, his first chance to reveal whether he is a hawk or a dove.

Best regards
Emma Brage
Investments
Private Wealth Management & Family Office

Please contact your private banker if you
have any questions or concerns, or if you
would like to change your subscriptions.

	‌	© 2022 Skandinaviska Enskilda Banken AB (publ).

This document produced by Skandinaviska Enskilda Banken AB (publ) (SEB) contains general information about financial instruments and financial services that SEB markets, sells or transmits. SEB is the global brand name of Skandinaviska Enskilda Banken AB (publ) and its subsidiaries and branches. SEB is authorised and regulated by the Swedish Financial Supervisory Authority, Finansinspektionen. Although the content is based on sources judged to be reliable, SEB will not be liable for any omissions or inaccuracies, or for any loss whatsoever which arises from reliance on it.

Historical returns are no guarantee for future returns. The value of financial instruments can both rise and fall and it is therefore not certain that you will get back all the invested capital. In some cases, losses can exceed the initial amount invested. Where either you or the underlying funds invest in funds or securities denominated in a foreign currency, changes in exchange rates can impact the return. For funds with share/unit classes that aim to currency hedge the return against movements in the fund’s base currency value, there is no commitment or guarantee that the currency hedge will be achieved. Neither the material nor the products described herein are intended for distribution or sale in the United States of America or to persons resident in the United States of America , so-called US persons, and any such distribution may be unlawful. The possibility to offer financial instruments can also be limited in other jurisdictions. This document may not be used to market, sell or transmit financial instruments in jurisdictions where this is unlawful. You are fully responsible for your investment decisions and this presentation material may not alone constitute the basis for such a decision. Instead, any investment decision shall be based on the detailed information about the financial instruments found in for example their fact sheets, information brochures, prospectuses, marketing material and/or product sheets, often available at seb.se. For funds that are not managed by SEB’s fund management company, this information can be obtained free of charge from your advisor at SEB.

Information about taxation. As a customer within international Private Banking/Private Wealth Management & Family Office, you are obliged to keep yourself informed of the tax rules with respect to bank accounts and financial transactions applicable in the countries of your citizenship, residence or domicile. As and when required, please request appropriate tax advice from relevant professionals before initiating financial transactions. You must yourself provide relevant authorities with information as and when required.

For UK residents
Skandinaviska Enskilda Banken AB (publ) is authorised and regulated by the Swedish Financial Supervisory Authority. Deemed authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.