The market and the economy in 2016
In a previous analysis, Pareto estimated that the full effects of the oil price slide would hit the mainland economy after approximately six quarters. By the start of 2016, precisely six quarters had passed since the oil price began its downward spiral. In the oil service sector, problems had long been mounting and the unease received plenty of fuel from outside the country. At the global level, markets staggered from concern to panic.
That was how 2016 started – but that was not how the year continued. After just a few weeks, the unrest abated, without any noticeable calming news of an economic nature. The market initially harboured deep concern about declining Chinese growth. Then, just a short time later, it seemed the market was not that concerned after all.
And so, yet again, we saw that the mood of the world’s asset markets can change quite markedly in a very short space of time.
The challenge is identifying the underlying patterns.
2016 in a nutshell
|S&P 500 return||+12.0%|
|MSCI World net (USD)||+7.5%|
|3-month NIBOR||from 1.13 to 1.17%|
|3-month STIBOR||from -0.29 to -0.59%|
|10-year Norwegian Treasury||from 1.54 to 1.70%|
|10-year Swedish Treasury||from 0.99 to 0.55%|
|10-year US Treasury||from 2.27 to 2.44%|
|Brent Blend||from USD 37.28 to USD 56.87|
|USD/NOK||from 8.81 to 8.62|
|EUR/NOK||from 9.62 to 9.09|
|GDP growth, global||3.1%|
|GDP growth, Norway||1.0%|
|GDP growth, Sweden||3.3%|
|GDP growth, Mainland Norway||0.8%|
Sources: Oslo Børs, S&P Dow Jones Indices, MSCI, Norges Bank, FactSet, IMF, Statistics Norway, SCB, Riksbanken, Pareto.