Category: News

What happened in February?

Global equities rose by 2.1% in February, but with significant volatility. Many stocks saw daily price swings of 5–10%, which is unusual. The shift away from the U.S. and technology stocks continued, but reversed again in early March, which has also led to noticeable declines in stock prices. After several strong months, Danish equities fell as much as 9% in February—primarily due to Novo.

Interest rates declined somewhat in February, resulting in fairly good returns across all types of bonds. However, in early March, rates have risen slightly again, and the dollar has strengthened after a weaker period. Oil prices continue to rise, while prices for precious and industrial metals have fallen again, though they remain highly volatile at elevated levels. Cryptocurrencies continue to decline.

Why? Tech uncertainty and war in the Middle East, and risk of economic stagnation

Initially, massive artificial intelligence investments by tech companies made an impact on the markets. Investors are concerned about whether these large investments will be profitable. If not, some of the world’s largest companies could face difficulties.

At present, however, markets are largely driven by developments in the conflict between the U.S./Israel and Iran—particularly the impact on oil prices and the risk of economic stagnation occurring alongside rising inflation.

Geopolitical instability also tends to hit markets with heavy speculation and high levels of leveraged investments. When these are affected by falling prices, it can trigger forced selling of other assets to cover losses, which in turn can lead to further declines. The largest stock market drops have been seen in Asia and Europe, which are more dependent on imported energy than the U.S., which is self-sufficient. Many stable, so-called defensive stocks in sectors like food and beverages, healthcare, and utilities have performed best during the turbulence.

The situation in the Middle East and its impact on financial markets

Financial markets are primarily focused on how the conflict may affect global energy prices, but also indirectly fertilizer and food prices. A large share of raw materials is extracted in the region and must pass through the Strait of Hormuz. It is estimated that 20% of global oil production and up to 40% of key raw materials for fertilizers are transported through this critical passage.

Most geopolitical experts and financial institutions expect the conflict to be short-lived, with limited and temporary effects on oil and gas prices, equities, and interest rates.

However, if the conflict drags on or significantly impacts key energy infrastructure—limiting the supply of oil or liquefied natural gas (LNG)—oil prices could quickly rise to $100–120 per barrel. In that case, we could be facing a serious economic shock—similar to the downturn following Russia’s invasion of Ukraine in 2022 or the oil crises of the 1970s. This would mean a negative shock that reduces consumers’ purchasing power, slows economic growth, and increases inflation.

Such a scenario would be negative for both equities and bonds and would particularly impact many countries in Europe and Asia, while oil-producing nations such as Norway, Brazil, and Russia would benefit. That is why all attention is currently focused on developments in the Middle East, especially what happens to oil prices.

A Peaceful August with Small, Positive Returns

In August, market movements were very small — both in the stock, bond, and currency markets, as well as in commodity prices. In the bond markets, yield curves became even steeper, meaning the difference between short-term and long-term interest rates increased.
Short-term rates remained stable, while long-term rates rose slightly. This led to a slight increase in the value of short-term bonds, while long-term bonds saw small negative returns in August. We’ve seen the same trend for much of the year, and as a result, short-term bonds have yielded a return of 1.8% over the past year, while long-term bonds have produced a negative return of -1.3% over the same period.

When it comes to riskier bonds, investors continued buying both high-yield bonds and corporate bonds in August, which are currently trading at historically low spreads compared to government bonds. This provided good returns — especially high-yield bonds, which returned 1.3% in August and 6.9% over the past year.

Global stocks returned 0.2% in August, bringing their return over the past year to 1.2%. Stocks from emerging markets — especially in China and Brazil — increased more than 10%. Danish, and particularly Nordic, stocks also performed well last month, but the Danish market has dropped more than 4% since New Year’s — mainly due to Novo’s decline.

The dollar remained stable, and prices for gold and silver continued to rise, while pressure on the oil price persists.

Why? Satisfactory Macroeconomic Data, a Dovish Fed, and Political Uncertainty

Long-term interest rates have risen in recent months, even as more and more central banks are cutting short-term rates. This is unusual, though it has happened before.

There are three main reasons for this:

Many countries have financial difficulties and are currently selling large amounts of government bonds. This is the case in the USA, but also in the UK and France, where political uncertainty is also a factor. Investors are unsure whether politicians will get control over debt and large deficits, and are therefore demanding higher interest rates as a kind of risk premium.

Another reason is uncertainty surrounding the US Federal Reserve — and its independence. President Trump wants to appoint people to the Fed board who support his desire for lower interest rates. This increases the risk of monetary policy becoming too loose, leading to excessive inflation — which has also increased demand for both gold and silver. Prices are hitting new records daily.

In early September, the pressure on long-term rates eased a bit, because there are signs of a sudden slowdown in the US labor market. Almost no new jobs are being created at the moment, and unemployment is rising. This gives the Fed an opportunity to cut interest rates multiple times in the coming months — a possibility that both Fed Chair Jay Powell and several board members have mentioned.

However, the weak labor market data in the US has so far had little impact on investors. That’s evident because stock and high-risk bond prices still appear optimistic. Investors seem to believe that the US economy won’t grind to a sudden halt, but is instead in a balanced state where companies can still earn well, while inflation remains low. Good earnings reports from listed companies reinforce this perception.

On the other hand, skeptics argue that the labor market signals in the US are classic signs of an upcoming recession — a recession that could also drag the rest of the world into an economic downturn, with falling profits, declining stock prices, and falling interest rates — which would then push bond prices higher.

The conclusion is, as long as investors believe in a soft economic landing as the macroeconomic scenario, the outlook is good for both stocks and bonds. But rising inflation or declining growth could change that.

Today is a special day at LÍV.

This morning we had a cozy gathering with Silja, Dánjal, Sunneva, and Óli.

Our lovely and talented apprentices, Silja and Dánjal, have now completed their training.

LÍV warmly congratulates Silja and Dánjal on completing their apprenticeships. We are delighted that Silja will continue with us, and at the same time, we wish Dánjal the very best in his future endeavors.

In addition to this, two of our employees are celebrating work anniversaries.

Sunneva has worked at LÍV for 40 years, and Óli has worked at LÍV for 10 years.

We are fortunate and grateful to have such dedicated employees.

We sincerely congratulate them on their work anniversaries and look forward to many more good years together.

Stock Market Growth Does Not Reach the Nordic Countries and Denmark – Interest Rates Remain Stable

The growth in stocks that began in mid-April continued last month, and a strengthened US dollar further boosted returns, resulting in a total return of 4.0% on global equities in July. This also means that the year-to-date return on global stocks has just edged into positive territory. Cyclical or economically sensitive stocks saw the largest gains, while defensive stocks did not rise much.

Once again, stock market growth did not reach Nordic and Danish equities, which in July had returns of -4.9% and -2.4%, respectively. A notable drop in shares of Novo Nordisk had a particular impact. From the beginning of the year to the end of July, Danish and Nordic equities have declined by about 4%.

Interest rates continued to fluctuate up and down in July, and the return on Danish government bonds was close to zero as a result. There was renewed interest in high-yield and riskier corporate bonds – over the past year, these have returned between 0.6–1.1% and 2.4–5.5%.

After several months of decline, the US dollar strengthened in July, which contributed to halting the growth in several commodities such as gold.

Why? Strong Earnings Reports and Optimism About Growth and Inflation

The strong returns are primarily due to investors around the world now believing that the global economy will experience a “soft landing” in the second half of 2025 – the so-called “Goldilocks” scenario. This refers to a situation where both growth and inflation are moderately low, so inflation and interest rates remain stable while growth is still strong enough for companies to increase their profits.

At present, most investors do not believe that Trump’s trade policies will significantly increase inflation in the US. The coming months will show whether this optimism holds. Strong earnings results in the second quarter – especially among American companies and particularly the large tech firms – have also contributed, although the US Federal Reserve’s decision not to cut interest rates had the opposite effect.

However, profit growth in several sectors has been quite low, which may indicate some growth challenges – both globally and in the US. Lower-than-expected inflation figures, on the other hand, have led many to expect that the US Federal Reserve (Fed) will cut interest rates next year, which has further boosted optimism in the stock market.

Conclusion, as long as investors continue to believe in a softer global economic outlook, the trend remains positive for both equities and bonds. However, rising inflation or lower growth could impact the current positive trend.

On July 21, we will be leaving our current premises at Kopargøta 1, where we have been located for many good years. It is with mixed emotions, both gratitude and excitement, that we move on to a new chapter.
We will be closed for summer holidays from monday, july 21 to friday, august 1

We will open on August 4 in our new premises at Óðinshædd 11.
You will find us on the 3rd floor of Óðinsbrú.

We look forward to continuing to provide you with excellent service in our new and modern facilities.

Today, the insurance company LÍV is announcing the new name and logo of the new building at Óðinshædd. Earlier this year, the company launched a naming and branding contest. After reviewing well over a hundred suggestions, the judging panel has now reached agreement on a new name and logo.

52 people participated in the competition, and over a hundred suggestions were submitted. Norse mythology — especially the god Óðinn — was a recurring theme among many of the proposals.

We are overwhelmed by the great interest and want to thank everyone who took the time to send us their suggestions,” says Angela Lindenskov á Bøgarði, marketing coordinator at LÍV.

The Name

Although many of the name suggestions were good, none were quite precise enough. The judges had the authority to choose from the pool as they pleased — but they also had the option to select none. Nevertheless, they were inspired by the many great proposals, and from that, a new name emerged.

“The name is Óðinsbrú, and it fits well with the location. ‘Brú’ is, of course, an old form of the word for ‘bridge’, and the building stands tall on the hilltop, where it somewhat resembles a ship’s bridge. One can imagine Óðinn standing at the helm, gazing out over Nólsoyarfjørður,” Angela explains.

The Logo

While no name was directly chosen from the submissions, the logo competition had a different outcome. Among all the elegant logo ideas, one stood out immediately. In its striking simplicity, the logo felt modern, while the classical color scheme gave it a sense of dignity.

“As seen in the image, the line above the ‘O’ doesn’t slant but is horizontal. This breaks orthographic rules but opens up new interpretations. While a slanted line suggests tension, a horizontal one symbolizes balance, precision, and security — perfectly reflecting the purpose of the building, where Norðoya Sparikassi and we at LÍV will soon be located,” Angela notes.

Henry á Fríðriksmørk won the logo competition and says the following about the design:

“Viewed purely as shapes, the logo is simply a circle and a line. Some might think of binary data (zeros and ones), others may see a golden crown and think of money. Perhaps someone even sees a hint of something sacred — like a halo or a royal crown. I wanted the logo to be open to interpretation.”

The logo will become part of the visual identity of the new building, which will be named Óðinsbrú. And it must be said, the name and logo complement each other well, as together they represent leadership, vision, and security — the very key values of LÍV and Norðoya Sparikassi, who work with life insurance and manage others’ finances.

“We’ve already grown used to the new name and logo, so now we’re just looking forward to moving in on August 4,” concludes Angela Lindenskov á Bøgarði, marketing coordinator at LÍV.

A Good May for the Stock Market

After a strong performance in mid-April, the growth in equities continued in May. Global stocks delivered a solid return of 5.8% for the month, which reduced the annual decline to -3.9%. And now, in early June, global equities are nearly back to the same level as at the beginning of the year. Technology and industrial stocks, in particular, performed well in May. Stocks that are typically less affected by economic cycles delivered more moderate returns. The growth in equities was observed in many parts of the world, especially in the USA, which for the first time this year showed the highest growth. Danish, Nordic, and European stocks, however, have performed the best so far this year.

Interest rates rose in May. As a result, the return on short-term bonds was close to zero, while long-term bonds experienced negative returns. The strong performance in the stock market also had a positive effect on corporate bonds and high-yield bonds, which rose between 0.5% and 1.2% over the month.

The US dollar has weakened significantly this year but changed little in May. Prices for several commodities, especially metals, increased after being low in April. Despite higher supply, the oil price also rose slightly.

Why the Improvement? Delayed Trade Measures, New Fiscal Policy, and AI Growth

In recent months — especially in April, May, and early June — investors have become more optimistic about the prospects for economic growth. This optimism has strengthened both stocks and corporate bonds, although it has also pushed interest rates slightly higher.

The new optimism comes from several developments. US President Donald Trump delayed plans to impose very high tariffs on imported goods for 90 days. Additionally, US courts have overturned the highest tariff rates that were implemented by presidential order. This has boosted confidence that the trade conflict between the US and especially China and the EU may not be as severe as many feared.

Furthermore, strong earnings reports from tech giant Nvidia have reinforced hopes that investment in artificial intelligence will continue at a strong pace.

Adding to this, the Trump administration has reversed course on fiscal policy and is now pursuing expansionary measures instead of trying to reduce the large federal deficit. There are also clear signs of a more flexible monetary and fiscal policy in both Asia and Europe.

What Now? The Good, the Rather Bad, and the Ugly Scenarios

As mentioned in last month’s market analysis, it is possible — to a large extent — to divide forecasts from international financial institutions into three different global economic scenarios for the next 3–12 months:

The Good Scenario:
The worst of the trade war is behind us, and in the coming days and weeks, a rapid de-escalation will occur. Trade agreements will gradually be reached between the US and its partners, and the high tariffs that have harmed global trade will be reduced.

The global economy begins to grow again after a brief downturn due to trade uncertainty. Corporate profits rise again, and default rates on bonds remain low. As tariffs fall, inflation drops accordingly and approaches the targets of both the Fed and the ECB (around 2%). This allows interest rates to remain stable or even decline.

If the good scenario becomes reality, we can expect new highs in the stock markets and good returns — both in corporate bonds and traditional bonds.

The Rather Bad Scenario:
Another group of investors believes a longer period of uncertainty lies ahead, with no clear direction for the equity and bond markets over the next year.

These investors expect it will take many months to reach agreements between the US, China, and the EU. On the one hand, companies and investors may become hopeful about the negotiations themselves, but on the other hand, the uncertainty about their duration and outcome could dampen growth, earnings, and investment for several quarters. This would also limit the US Federal Reserve’s ability to cut interest rates.

The Ugly Scenario:
The third group — the most pessimistic investors and financial institutions — believe we are already in what is called a “bear market,” where major declines in stock prices are to be expected. In a typical bear market, declines are moderate; but in a structural bear market, like during the 2008 financial crisis or the dot-com bubble in 2000, losses can be as steep as 50%.

Such downturns usually last between 1½ and 4 years, and it can take anywhere from 5 to 20 years to recover the losses.

The pessimists believe the US might succeed in securing a few minor trade agreements, but that major deals with China and the EU will take longer — or might not happen at all. This would lead to economic stagnation and push the global economy into a worldwide recession.

This would mean major write-downs in asset values, more bankruptcies, higher unemployment, and rising inflation — a situation that makes it very difficult for central banks to ease the economic crisis.

With the highest contributions to pensions and insurance so far, the year 2024 has gone well – for both the company and the customers of P/F Tryggingarfelagið LÍV.

The year 2024 was successful – for both the company and the customers of P/F Tryggingarfelagið LÍV.

The financial market performed well in 2024, just as it did in 2023. The company achieved a total return on its investment assets of DKK 356.5 million. Customers with market-based returns saw returns between 6.82% and 19.08%. The return depends on the level of risk chosen by the customer. Customers with the lowest risk received a return of 6.82%, while customers fully invested in equities received a return of 19.08%. The average customer with 15 years until retirement received a return of 10.20%.

Customers with medium risk at LÍV received a slightly better return than corresponding customers at Danish pension funds after tax. The company is pleased with that.

Contributions to pensions and insurance totaled DKK 453 million – the highest to date. Contribution growth compared to 2023 was approximately 9.2%.

The trend in customer acquisition and contributions has laid the foundation for the company to reduce the administration fee for customers with market-based returns. The administration fee was reduced from 3% of contributions to 2.5% as of January 1, 2025.

“Solidarity, where more shoulders bear the burden, should benefit the customers who own the company. Therefore, the administration fee for customers with market-based returns will be lowered once again, effective January 1, 2025,” says Jan Jakobsen, CEO of Tryggingarfelagið LÍV.

As we enter 2025, dark clouds are gathering over the financial markets. Uncertainty is greater than usual, and a possible trade war among several of the world’s major economies looms. This creates uncertainty, which has already been reflected in the financial markets during the first months of 2025.

Below are the key figures for the 2024 financial statements, which were approved at the annual general meeting on April 30, 2025:

At the annual general meeting on April 30, 2025, Hanna í Horni (vice chair), Kári Petersen, Súni Selfoss, and Árni Arge were re-elected. The chairman, Høgni Olsen, had announced that he would not stand for re-election. In his place, Árni Ellefsen was elected. The company thanks Høgni Olsen for his contribution over the past eight years as chairman of the board and likewise congratulates Árni Ellefsen on his election.

P/F LÍV lívs –og pensjónstryggingarfelagið (LÍV 3)

P/F LÍV, the life and pension insurance company, also held its annual general meeting on April 30, 2025.
Finn Danberg was re-elected and continues as chairman of the board, and Gunnleyg Árnafjall was re-elected and continues as vice chair. Kári Petersen and Árni Arge were also re-elected as board members. Høgni Olsen did not run for re-election, and in his place, Árni Ellefsen was elected.

LÍV 3 is a closed company that does not establish new pension agreements. The company has insurance agreements with benefit guarantees, for which the Government of the Faroe Islands provides backing.

The company had a good year in 2024. The result from investment activities yielded a return of just under DKK 214 million. The company holds investment assets amounting to approximately DKK 1.978 billion.

The net result after tax was DKK 126.4 million. Total insurance premiums for existing insurance agreements amounted to DKK 37.3 million in 2024.

Based on the company’s benefit obligations to its policyholders, the parent company has a negative equity of DKK 479.4 million as of year-end 2024.

The 2024 annual reports can be viewed here.

Severe Stock and Interest Rate Declines in March and Early April

Global stocks fell by a full 7.5 percent in March, and the decline has continued into early April. This brings the total drop since the beginning of the year to 15.9 percent. The losses have been greatest in U.S. stocks, with a weaker dollar also dragging down tech stocks and cyclical stocks. Stocks that are less affected by economic fluctuations, as well as value stocks, have experienced the smallest declines.

On the other hand, the price of safe government and mortgage bonds has increased, as both long- and short-term interest rates have dropped. Market turmoil has gradually also spread to corporate bonds, but here the losses have been very limited.

Prices of commodities such as oil, copper, gold, and silver have fallen significantly.

Why? Fears of a Trade War and Global Economic Downturn

On April 2, U.S. President Donald Trump significantly increased tariffs on all goods imported into the U.S., far more than expected. China responded with equally high retaliatory tariffs on U.S. exports to China, while the EU is preparing its own countermeasures against the U.S.

All of this increases the risk of a global trade war and an international economic downturn, with negative GDP growth, lower company earnings, inflation, and rising unemployment. The tariff hikes have the same effect on American consumers as a tax increase. At the same time, much business activity is coming to a halt, as companies are waiting for clarity on the future of global trade arrangements.

Therefore, all economists agree that the longer the uncertainty about trade wars and retaliatory tariffs continues, the greater the damage will be to economic growth and corporate earnings.

What Now? Possible Agreements Between the U.S., China, and the EU in Focus

In the near future, attention will be focused on whether agreements can be reached between the three major economic powers, which could reduce uncertainty. That would be very positive for the stock market, corporate bonds, and commodity prices.

Right now, there are no signs of goodwill from the Trump administration, but many investors hope that pressure from an increasingly dissatisfied business sector in the U.S. and from Republican politicians will persuade Trump to reconsider and lower tariffs again.

We will soon be moving into a new headquarters at Óðinshædd.

Therefore, we are organizing a competition for a name and logo. If you have suggestions for what the new headquarters at Óðinshædd should be called or ideas for a logo to decorate the building, you have the opportunity to participate in the competition.

The new building has three floors. Norðoya Sparikassi and LÍV will lease the bottom and top floors, while the middle floor will likely be a co-working space, ideal for smaller companies and businesses.

We envision the building having a short, catchy name and a logo that suits the activities in the building.

Anyone can participate in the competition, and there is no limit to how many suggestions you can submit. There is no requirement to submit both a name and a logo; you can submit suggestions for either one or both.

A prize of DKK 5,000 will be awarded for the best name, and DKK 5,000 for the best logo.

A judging panel will be appointed to assess the suggestions.

The panel reserves the right to freely choose between the suggestions, including selecting none, as well as to modify and/or combine different suggestions.

Send your suggestion with an explanation to kapping@liv.fo before April 14, 2025.

Please include your name, address, and phone number in the email.

By participating in the competition, you grant LÍV permission to use, modify, and publicly release the name, logo, and any related material (such as advertisements or descriptions) without consent or compensation.