Carlsquare Equity Research: Swedish consumer sector snapshot

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• Household confidence is on an upward trend, reflecting a growing sense of stability and optimism. The shift is mainly attributed to the decline in interest rates in the wake of a fall in inflation, and a robust labour market. The improvement in household confidence was recorded in the end of 2023. Subsequently, and with a slight delay, the retail trade confidence indicator showed a corresponding increase.
• The improved sentiment and strong Q3 reports have been reflected in the equity market, as evidenced by the outperformance of the CSQ Consumer Index relative to the OMXSPI. This trend is illustrated by the widening spread shown in the chart “CSQ Consumer Index, less OMXSPI” below. Also, as investors are reallocating resources to the consumer sector, leading to an expansion of valuation multiples.’
• The ongoing shift in consumer confidence is expected to sustain and drive demand for consumer stocks pushing the sector higher, provided the upcoming Q4 reporting season with accompanied guiding avoids outright disappointment.

Source: S&P Capital IQ and Carlsquare

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