Global Market Report - January 10 2018

World markets were broadly higher but a rise in the euro held back European shares

Morningstar 11/01/2561

Asia

After a confident start to the year, Japanese indices put in a mixed performance on Wednesday amid wider gains for Asia-Pacific markets after another positive close on Wall Street overnight. The movements in Japan’s Nikkei, which was down 0.2% on the day, and the Topix index, which was 0.15% higher, were modest. China’s inflation for December was 1.8% higher than the same month in 2016, but this figure was marginally below forecasts. 

Europe

UK investors were given a further insight into the performance of listed retailers with the release of Sainsbury’s (SBRY) Christmas update. The company’s shares rose strongly at the open, posting a gain of over 3%, before dropping back in midmorning trading. Investors were cheered by record sales volumes, but percentage gains on 2016’s Christmas period were more modest: total retail sales in the 15 weeks to January 6 were up 1.2% excluding fuel. Grocery sales were a bright spot, rising 2.3% year on year and 8.2% online. The market reaction is similar to that which greeted rival supermarket Morrisons (MRW); Britain’s biggest supermarket Tesco (TSCO) will report on Thursday.

Britain’s biggest housebuilders are having a harder time than supermarkets at the start of the year. Taylor Wimpey (TW) updated the market with news of higher sale prices for its homes, and a rise in the number of houses sold in 2017, but investors were less impressed. Persimmon (PSN), which updated the market yesterday, was also weaker. Its shares have fallen £1 since the start of the year to below £27. Economic data also added to the current gloom surrounding the sector so far in 2018: the UK construction industry in November contracted at the fastest rate since 2012. The FTSE 100 drifted lower approaching midday and eurozone exchanges were weaker after the euro gained further ground against major currencies. 

North America

The 100-point rise in Dow Jones on Tuesday suggested that there is little to disturb the US bull run so far this year, especially ahead of the foreshortened trading week coming up. The start of earnings season on Friday will give some indication whether this latest rally, after the Dow broke through 25,000, is solidly built on fundamentals. Last earnings season saw tech companies beat forecasts substantially, so it will be interesting to see whether this can be repeated in the fourth quarter.

Weekly crude oil inventories will be released, and the Federal Reserve’s James Bullard gives a speech on the US economic outlook in Missouri. 

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