Global Market Report - October 6 2017

The FTSE 100 rose as the pound fell over political uncertainty, while global investors were looking ahead to US job numbers

Morningstar 09/10/2560

Asia

Japanese equities gained confidence from yet another record close on Wall Street, with the Nikkei index closing up 60 points at 20,690.71, ahead of a public holiday on Monday. Hong Kong’s Hang Seng index rose again, closing at 28,458.04, up over 10,000 points since the start of 2016 – and within touching distance of 2007’s record high just above 30,000. China’s stock markets re-open on Monday after a week-long break, while South Korea’s Kospi is closed until Tuesday.

Europe

UK equity investors were given a boost by political uncertainty at the end of the week, with a fall in the pound against the dollar helping to push the FTSE 100 above 7,500 for the first time since August. Nevertheless, the gains were made by defensive companies such as Mediclinic (MDC), NMC Healthcare (NMC) and British American Tobacco (BATS). Banks and commodity firms were among Friday’s losers. Halifax figures on the housing market were more upbeat than those published in September by Rightmove. The building society said that the average price of a home had hit a record high.

In more downbeat news for the UK government, Britain’s productivity levels for 2016 were found to be 15% lower than the rest of G7 group of developed countries.

Spain’s political crisis intensified as the country’s constitutional court suspended Catalonia’s regional parliament meeting on Sunday, which was expected to see the region declaring independence after last weekend’s troubled vote. Spain’s 10-year bond yield rose to 1.71% and the country’s Ibex index fell nearly 1% to 10,149. Spanish bank Banco Sabadell (0H00) – the owner of Britain’s TSB Bank - has confirmed that it is moving its registered office out of Catalonia to Valencia. 

Unlike Spain, Germany’s Dax joined in the global rally by posting a new record high, trading closed to the as-yet-unbreached 13,000 level. 

North America

The week’s biggest economic event is the release of September’s US employment numbers, which are expected to show that 80,000 jobs were added in the month. Last month’s non-farm payrolls came in at 156,000, below expectations of 180,000. Some Wall Street analysts are forecasting the same trend again – with the number of jobs added coming in around 50,000.

Any concerns about the strength of the US economy have been shrugged off by the US stock markets this week, which have maintained their upwards streak – the Dow Jones closed up over 100 points at 22,775.39, another new record, while the S&P 500 closed up over 0.5% at 2,552.07.

With the US bank reporting season due next week, a strong set of results from financial stocks could push the Dow towards the 23,000 level.

In terms of economics, Canada’s job numbers for September are also in focus – the economy is expected to have added 12,000 jobs in the month, against 22,000 in August. The Canadian jobless rate is expected to remain the same at 6.2%.

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