The Danish C25 index experienced a true Halloween horror last week with 5% drop during week 43 – the lowest closing level in 2 years.
October has been hard on the Danish shares – only beaten by August 2011 where we saw a decrease of 14,76% in connection with the sovereign debt crisis.
Monday morning, the stocks have opened on a more positive note. Italy avoided downgrading its credit rating so that the crisis around the country’s state budget did not immediately worsen.
Amongst the shares that have given C25 a much-needed upswing, is FLSmidth(FLS)and Lundbeck(LUN). FLSmidth starts near the top of the C25 with an increase of 2,6% to 333,50 DKK.
Lundbeck had a more modest increase, compared to the massive decline we saw last week of 27,89% after the news about a failed study of a drug against schizophrenia. On Monday morning, the share rose by 2.7%.
Also Nordea(NDADK), Genmab(GEN)and Mærsk(MAERSKA) showed positive movements Monday.
Among the reasons to the stir on the stock market is; The trade war, The US midterm election, Italy’s budget deficit, FED increasing rates, Brexit and the homicide of journalist Khashoggi in Saudi Arabia.
The trade war between China and the US is playing a part in weakening the global economy. Donald Trump has made a deal with Canada and Mexico, that is supposed to substitute the North American trade deal NAFTA.
The imminent midterm election in the US may mean that the Republican party will lose its majority in one or both houses of Congress which could make passing policy changes, more difficult for the government. Especially the tax reform that is already passed, which will be difficult to reverse.
Italy has made a proposal for next year’s fiscal law with a budget deficit of 2.4% of the country’s GDP. A proposal the EU commission will not approve of. Italy is the world’s third-largest issuer of bonds and at the same time holds a government debt of 130% of their GDP.
The recent US interest rate hikes have been of major concern for investors. More interest rate hikes are also expected to come, according to President Donald Trump.
Brexitstill brings insecurity because no final “divorce agreement” has been reached yet. The agreement has to be settled by March 29. 2019. If the agreement is not done on time, Great Britain has to trade with the EU under the WTO regulations, which means higher tariffs and customs.
Also the diplomatic crisis between Saudi Arabia and the US is creating stir after it has come out that the journalist Jamal Khashoggi was killed at the Saudi Arabian consulate in the Turkish city Istanbul. Khashoggi was known for writing critical articles about Saudi rule and other regimes in the Arab world.
As the market opened Tuesday, there was uncertainty about the overall mood as the US shares went from plus to minus on Monday evening. This is a result of the rumors that the US government is preparing a new round of duty rates on imports of Chinese goods, in the absence of a solution to the trade dispute at a meeting between the two countries in November.
Wednesday had a positive development on the market, and OMX Copenhagen 25 GI (OMXC25GI) closed at 1068 points, which is an increase of 1.38%.
Overall, October showed a decline of 8.5%.