Some argue the Vikings discovered America about 500 years before Christopher Columbus. In the same pioneering spirit, Sweden’s Riksbank is leading the US Federal Reserve on interest rate cuts, having made two already this year. The Riksbank’s looser approach to monetary policy reflects the increasingly precarious position of Sweden’s economy. But its woes could be a warning sign for elsewhere in Europe too. The trouble is that this is hard to discern from Sweden’s stock market.
Exporters such as Atlas Copco, which manufactures all manner of industrial parts such as gas compressors, and mining equipment maker Sandvik had a good start to the year as the economies they sell to performed well. That has turned around since the end of May, with Swedish industrial stocks underperforming the rest of the domestic market. Orders at Atlas Copco were 2 per cent below market expectations in the second quarter. Weak demand from the auto sector was particularly noticeable.