Stockholm Stock Exchange opens strong on Tuesday – very strong- why?


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Tuesday, 23 August 2011
Stockholm bourse open on Tuesday morning’s opening with a very strong exuberance with most indices trading up begging our immediate question as to why such a sudden change from gloom to cheerfulness?

Following the bright performances of the Asia stock markets last night, or early morning, most leading Europeans markets also got up with this growing enthusiasm.

On Tuesday's opening trade, the Stockholm Stock Exchange just continued with yesterday's gains together with the leading European stock exchanges. Stronger PMI numbers than expected from Germany and China contributed to the positive sentiment. Building company, Peab went against the tide after a weak report.

After an hour's trading on Tuesday the OMXS30 was up 2.6 percent to 910.7. Turnover on the Stockholm Stock Exchange was Skr3.0 billion, while the consolidated turnover, which also includes Burgundy, Chi-X, Turquoise and Bats, amounted to Skr4.1 billion.

In Europe, the FTSE and Eurostoxx up 1.7 and 2.3 percent respectively while the CAC and DAX rose 2.2 and 2.4 percent each.

Half an hour after the market opened, data from Germany showed that German industry's purchasing managers' index remained unchanged at 52.0 in August. A decline to 50.6 was expected here.

Although the estimate of euro area's overall purchasing managers index (PMI Composite) was unchanged at 51.1 in August, analysts’ expectations were an index of 50.0.
During the night the statistics showed that China's purchasing managers' index for the industrial sector rose to 49.8 in August from 49.3 in July.

This reduced investor concerns that the Chinese economy is slowing down. "August-PMI is much better than expectations, which were too pessimistic," said Wu Kan, fund manager of Dazhong, to Bloomberg News.

The cyclical Swedish companies, Sandvik, SSAB A shares and Atlas Copco A shares supported the index with gains of 3.9, 3.8 and 3.1 percent respectively. This comes despite the fact that Nordea Markets has lowered its view of "capital goods", which prompted a series of reduction in recommendations in the sector.
ABB, H�gan�s, Alfa Laval and Trelleborg were lowered to sell from the container. Sandvik, Husqvarna and Lindab was cut to hold from buy.

ABB and Alfa Laval were up 1.7 and 3.1 percent respectively, while Husqvarna and Trelleborg rose 1.9 and 3.5 percent.

Nordea also cut recommendation on Scania to keep from strong buy. Shares rose 4.4 percent to Skr104:40.
The more defensive shares Astrazeneca and Swedish Match could not quite keep up with the upturn. Their shares were up 1.1 and 1.3 percent to Skr296:30 and Skr234.
The banks contributed to a negative margin to the index with gains of 1.9 to 2.6 percent.
Builder, Peab fell by 1.8 percent to Skr33:70 during Tuesday's opening trade after having reported in the morning, a profit before tax of 25 percent lower than expected according analysts.  Operating margin was 3.9 percent, against the anticipated 4.9 percent.

The building company’s margin more than halved compared with the second quarter of last year, to 2.1 percent, which was explained by lower profitability in the old order and a cautious earnings development in large projects.

The sector’s winner was Skanska with its B shares up 2.7 percent Skr91:50 while the NCC B advanced by 3.9 percent to Skr111.

Bjorn Borg's profit after tax was Skr 6.5 million for the second quarter of 2011. Net sales amounted to Skr102 million.
Shares were up 3.0 percent to Skr 41:60.
As trading continued to mid day, the market remains strong and held its position. By 13 hr Swedish time the Stockholm bourse was trading up 2 percent.
By Team

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