Resilient stock market sees optimism return

On Thursday, 24 September, the Swedish clothing company H&M will kick off the third-quarter 2026 earnings season on the Stockholm Stock Exchange. For H&M, however, the upcoming quarterly results cover the period from 1 June to 31 August. While the company's first-quarter 2026 results exceeded market expectations by 6%, its second-quarter results fell short of analysts' forecasts by 7%.

The focus regarding H&M’s earnings is primarily on reducing administrative costs, specifically those below the cost of goods sold, with the aim of achieving an operating margin of 10%. With an operating margin of 8.5% for the trailing twelve months of 2025/26, H&M still has some way to go to reach its target.

In order to reach this target, it would be beneficial for the H&M Group to increase sales rather than relying solely on efficiency measures such as reducing administrative costs. However, this is unlikely to be reflected in H&M's quarterly report for this period, given that retail trading volume in the Eurozone fell by 0.6% in July 2026. Nevertheless, retail sales increased by 3.4% in the United Kingdom between June and August 2026.

A disadvantage for H&M is that the US dollar has recently strengthened, increasing the company's purchasing costs. However, the dollar’s appreciation is more pronounced against the Swedish krona (SEK) than against the euro. The H&M Group has an annual payment inflow. of around €40 billion and outflows of approximately $60 billion. The SEK is not even among the group's four most important currencies for cash flows, which is linked to the share of revenue generated in Sweden — just 5- 6% of the group's total.

With the share price standing at SEK 167.85 at the time of writing, H&M is currently trading at a P/E ratio of 22x — a figure which would fall to 18x were the company to reach its target operating margin of 10%. The strongest argument for investing in H&M stock is its annual dividend of SEK 7.10, yielding 4.2% at the current share price. Additionally, the company regularly launches share buyback programmes. 

While the stock does not appear particularly strong from a technical standpoint, it has now fallen just above the MA100 level on the five-year share price chart.

As expected, the Federal Reserve raised its benchmark interest rate for the first time in over three years on Wednesday, 16 September. Backed by all twelve voting members, the 0.25 percentage point increase brought the US benchmark rate into the 3.75–4.00 per cent range. Interest rate projections suggest a further increase this year and indicate the possibility of an additional rise in 2027. The market reaction was also hawkish, characterised by sharper rate increases at the short end of the curve compared to long maturities, and a stronger US dollar. 

Global stock markets lost momentum in the wake of last week’s rate increase, but have since recovered. Despite the ongoing conflict in the Middle East, bulls were back in charge on Tuesday 21 September, as oil prices fell. The US announced that the volume of oil and cargo passing through the Strait of Hormuz was the highest it had been in six months. Trump indicated that he would be willing to hold further talks with Iran amid the UN General Assembly this week.

Calendar

On Wednesday, 23 September, the focus of the macroeconomic news agenda will be on the September Purchasing Managers' Indexes (PMIs) from India, France, Germany and the Eurozone. We are also expecting weekly oil inventory data from the US Department of Energy.

On Thursday, 24 September, H&M will release its quarterly report. ABB will be holding a presentation on data centre solutionsThe day will begin with the release of Japan’s Purchasing Managers' Index (PMI) for September. A few hours later, we will find out about French industrial expectations for September. Next is Germany’s Ifo Index, also for September. We are also awaiting interest rate decisions from three European central banks: Sweden, Norway and Switzerland. The day will conclude in the US with the release of the second-quarter current account balance, weekly jobless claims, new home sales for August, and the Kansas Fed Manufacturing Index for September.

Stock markets in mainland China will be closed on Friday, 25 September. Figures for Swedish household lending and the producer price index, both for August, will be released. Germany will publish the GfK consumer confidence index for October.. Spain's Q2 GDP will also be published. The US will publish data on durable goods orders for August and the Michigan consumer sentiment index for September.

The S&P 500 bounced back nicely from the MA100, while the MACD has turned positive. With the continued help of falling oil prices and yields, the index could therefore be on its way to testing previous highs.

The same applies to the Nasdaq-100, which is even more sensitive to changes in interest rates, with an impact in both directions.

Meanwhile, in Sweden, the OMXS30 is currently approaching previous highs. The question is whether there is enough momentum in the market for the index to reach new highs. If not, the first level of support can be found at around 3,275.

As the chart below shows, the German DAX is clearly lagging. Perhaps the long DAX, short OMXS spread could be of interest to the contrarian investor.

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence