Global Market Report - November 13 2017

A resurgent yen pushed Japan's Nikkei down sharply on Monday, while UK investors were digesting the latest political turmoil in the Cabinet

Morningstar 14/11/2560

Asia

After a recent winning streak in which Japanese equities hit 25-year highs, the Nikkei 225 started the week with a slump of over 300 points as the yen strengthened against the dollar. A muted close on Wall Street added to the weaker sentiment on global equities, especially without the driver of strong US earnings releases to push markets higher.

China’s CSI 300 and Hong Kong Hang Seng managed to buck the negative trend in Japanese, South Korean and Australian benchmarks by closing modestly higher than Friday’s close.

Europe

Weekend reports of further disharmony in the Conservative Party have unsettled the pound on Monday morning, which has made strong moves downwards against the euro and the dollar. With the Budget set to be delivered next Wednesday, political commentators are focused more on the Prime Minister’s chances of survival in the coming months rather than details of fiscal policy.

Sterling fell to 1.12 against the euro, from 1.13, and against the dollar the pound slid from nearly 1.32 to just above 1.30. The dollar-earners of the FTSE 100 received a boost from the pound’s weakness – miners such as Fresnillo (FRES) were higher, along with Royal Dutch Shell (RDSB) and Pearson (PSON). Housebuilder Taylor Wimpey (TW) was nearly 1% higher after a positive trading update which lifted fellow home construction firms. The company was upbeat about the state of the UK housing market, especially in the light of the recent interest rate rise. Nevertheless, Rightmove’s house price index showed a month-on-month fall of 0.8% in November – the year on year rise is just 1.1%, a fall from October’s figure of 1.4%.

Looking ahead this week to the UK’s biggest economic events, Tuesday’s inflation data is forecast to show a 3.1% rise in the cost of living as measured by the Consumer Price Index. Wednesday will most likely show a fall in unemployment combined with weak wage growth. Thursday’s retail sales data will show how robust consumer spending has been in the light of the ongoing political turmoil and after November’s rate rise.

European exchanges were weaker amid disappointing earnings and a profit warning from French utility EDF (EDF). Tomorrow sees the release of third quarter GDP numbers for the eurozone as a whole and also its constituent countries. 

North America

US investors will be looking ahead to Wednesday’s key releases on October inflation and retail sales. Significant earnings releases this week include Cisco Systems (CSCO) and retailers Target (TGT), Wal-Mart (WMT) and Gap (GPS).

In the futures markets, the Dow and S&P are expected to open flat after last week’s selloff. The US President is expected to make a “major announcement” on trade on Wednesday following his two-week trip to Asia.

In M&A news, reports for an offer for toymaker Mattel (MAT) from rival Hasbro (HAS) has pushed up the bid target’s shares over 20% in pre-market trading.

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