Asia
Markets in the region were mixed on Monday in the absence of any strong drivers from either the recently record-breaking US markets or from the global macroeconomic picture. Japan earnings are light this week ahead of Thursday’s Labour Thanksgiving Day – or Harvest Festival. The main indices, the Nikkei and Topix, were modestly lower, following Wall Street’s lead. The Nikkei, at 22,261, is around 1,000 points off the 25-year high recorded just two weeks ago. Hong Kong’s Hang Seng and China’s CSI 100, in contrast, ended the day in positive territory.
Europe
Investors in the region had assumed that German politics would be not be a concern after Angela Merkel’s emphatic re-election at the end of September. But as coalition talks collapsed over the weekend, the prospect of political instability returned. Germany’s Dax was trading below 13,000 points on Monday morning, a few hundred points below recent record highs.
As a result, currency investors initially bought sterling at the expense of the euro, which hit FTSE 100 shares on the first trading day of the week. A strong fightback by the euro against the pound then gave the UK index more support in midmorning trading.
UK housebuilders such as Persimmon (PSN) and Barratt Developments (BDEV) were modestly higher after the Chancellor, Philip Hammond, said over the weekend that the Government would commit to a housebuilding target of 300,000 homes in Wednesday’s Budget.
North America
US markets closed lower on Friday after a nervous week of trading. Futures markets suggest that this trend is likely to continue this week with a lower open on Monday. With Thanksgiving this week likely to delay any progress on tax reform until after the holidays, US investors are likely to take a wait-and-see-approach. An early close on Friday means there are effectively only three-and-a-half trading days this week. Nevertheless, there is some data of note: Tuesday sees the release of existing home sales numbers, while durable goods orders and weekly jobless claims will be published on Wednesday. Midweek will also see the release of minutes from the Federal Reserve’s November meeting, where interest rates were held.
In earnings releases, Monday continues last week’s fashion retail theme with Urban Outfitters (URBN) publishing figures after the market closes.
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