Market commentary: Norway cuts interest rates, while GE sells Private-Equity Unit

Stocks posted mixed performances while investors have been trying to shake off the negative effects of the unforeseen misbehavior of Volkswagen, which has dragged the whole auto industry in both the customers’ and regulators’ bad side, has spread concerns over car manufacturers’ ethical standards and has caused a widespread sellout across automaker names. 

Asian markets closed lower, led down by Japanese stocks, with the Nikkei 225 losing 2.76%, and Hong Kong‘s reference equity index declining close to 1%. US stocks had a choppy trading session on Wednesday too, with the S&P 500 closing 0.2% lower, the Dow Jones shedding three tens of a percentage and the Nasdaq closing substantially flat.

European markets, traded flat this morning after two rather volatile sessions dragged down by the auto sector and by energy names that continue to witness weakness on the back of declining oil prices.

Although for consumers and heavy energy and oil consuming industries, such as airlines or metal producers, the current prolonged depression in crude prices has been increasingly beneficial, for energy producers and oil exporting countries the last 12 months of declining prices has been rather detrimental.

Confirming this, comes today’s announcement that the Central Bank of Norway, Europe’s biggest oil exporter and among the largest energy producers in the world, cut the country’s main reference interest rate by a 25 basis points to 0.75%.

This move is a clear attempt from Norway’s monetary authority to provide some support for the country’s economy, for which the over 51% collapse in the Brent Benchmark oil price has caused a more severe negative shock that the 2008 financial crisis did. The country’s currency plunged against all peers, losing as much as 2% against the Euro today, bringing its decline to around 11.5% since the beginning of the summer.

With oil prices still at multi-year lows and the country’s inflation running over the Central Bank 2.5% target, analysts are now expecting another interest cut before the end of the year, as the Central Bank will try to provide Norway’s economy some needed relief.

Meanwhile, in the US, General Electric Co., one of the largest industrial conglomerates within developed economies, announced to have finalized an agreement to sell its Private Equity Unit to French Alternative Asset Manager Ardian in a deal valued at $500 million.

Through this sale, General Electric has substantially completed its exit from the alternative investment industry, and has moved a step forward in its financial sector divestment strategy, aimed at winding down the major part of the firm’s financial assets, while refocusing on core bonuses such as turbines and engines development and manufacturing.

The latest deal comes after a major sale in April this year when GE Capital, the group’s financial services division, agreed to sell its real estate portfolio to Blackstone Group LP and Wells Fargo & Co for over $23 billion.

Shares in GE closed slightly up on Wednesday, while the stocks has delivered a substantially flat performance so far this year, losing around half of a percentage point since January 2015.

Disclaimer:

This article was issued by Paolo Zonno, Trader/Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt .The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.