The first months of this year were quite turbulent for the Austrian stock market. Until mid-February, the ATX recorded a very strong performance - relative to other markets. While growth sectors such as IT or health care had to accept high price corrections due to inflation concerns and supply chain problems and slid into the red, those sectors that dominate the Austrian stock market – financials and utilities – held up very well. By mid-February, the ATX was still up 5 %. However, the tide has turned with Russia's invasion of Ukraine. Companies active in Russia and/or Ukraine, such as RBI or OMV, suffered large price losses. The entire financial sector, including stocks without direct exposure to Russia, such as Erste Bank, was practically sold off. The conflict was also clearly felt by industrial companies. On the one hand, it fuelled the already existing supply bottlenecks, on the other hand, there were significant energy price increases and concerns about a halt in gas deliveries from Russia. In March, the ATX was nevertheless able to recover somewhat after the first major shock and has since moved sideways. As of 30 May 2022, the index was down by around 11% in total return.
The war in Ukraine is causing uncertainty in the market and investors are holding back. However, if one follows the reports on the quarterly figures, there is also much positive to report. The order books are full to bursting. A large number of companies recorded increases in turnover in the first quarter, and the profit trends also tended to point in the right direction. At the same time, high inflation-driven costs are being reported. The central banks are already reacting with higher interest rates, but these in turn are having a negative impact on economic development. Basically, the ATX is less vulnerable to strongly rising interest rates compared to other markets due to its value character. On the other hand, it is a very cyclical market, so a weakening of the economy is not a desirable scenario. Accordingly, the further development depends very much on the stagflationary tendencies, and of course how the war between Russia and Ukraine will continue and which economically relevant (covid) measures China will set.
Author:
Ingrid Szeiler
Chief Investment Officer
Raiffeisen KAG
1 June 2022
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.