The economy is opening up

For the month as a whole, the US S&P 500 Index rose by 0.7 per cent measured in USD, while the European Stoxx 600 Index climbed 2.7 per cent measured in EUR and the Nordic VINX Index went up by all of 4.2 per cent measured in NOK. Here in Norway, the Oslo Stock Exchange (OSEBX) increased by 2.8 per cent during the same period.

Approaching herd immunity

As global infection figures decline, we are starting to see the effects of the worldwide vaccine programmes, and several economies are approaching herd immunity. In the UK and Israel, for example, around 70 per cent of the population are either vaccinated or have previously been infected. The USA is right behind, with just over 60 per cent. This means we are once again seeing greater mobility, restaurant bookings and a desire to travel.

Highest inflation in 30 years

The pent-up consumption demand that is now being unleashed, together with a supply side impeded by constant bottlenecks and component shortages, means that inflation is rising. In the USA, the April figures showed inflation of more than 3 per cent – the highest for 30 years. Base effects – in that the rise in commodity prices is particularly strong compared to last year – also affect inflation. We will probably know more about whether inflation will rise or fall in the future once the base effects decline in a few months.

Vacant positions

Unemployment in the USA is still higher than it was before the pandemic started. However, companies are finding it difficult to fill vacant positions. Stimulus cheques and favourable social security schemes are pointed to as one of the reasons for it being difficult to find labour. The question going forward is whether companies will have to raise salaries in order to entice people to return to work. Long-lasting higher inflation is probably also dependent on us seeing higher salaries.

The road ahead …

The macro picture is continuing in the same direction as before, with increasing growth in the global economy. This is supported by the reopening of society, combined with the authorities’ stimulus measures. Such a backdrop is positive for company earnings and means that shares still appear to be an attractive alternative.

A bank is a place that will lend you money if you can prove that you don't need it.

Bob Hope