Global Market Report - January 11 2018

Global markets were cautious ahead of US earnings season, while updates from UK retailers Tesco and Marks & Spencer were not well received by the market

Morningstar 15/01/2561


After a strong start to the year so far, stock markets in Asia-Pacific reacted to the recent note of caution on Wall Street ahead of the start of earnings season on Friday. Japan’s Nikkei was the biggest faller among the region’s indices, but falls across the board were modest. Markets in Japan had the potential to push higher with a softening in the yen and news that the country’s “leading index” – a barometer of future economic activity – was at the strongest level in four years. China’s Shanghai and Shenzhen Composite Indices were a touch higher on the day before, as was Hong Kong’s Hang Seng index. 


Germany’s economy grew by 2.2% in 2017, the fastest growth since 2011, a touch below forecasts but higher than the 1.9% seen in 2016. Nevertheless, the euro struggled to keep up its strong performance against the dollar in recent days, despite stronger Italian retail sales and better industrial production figures. Overall, the movements on eurozone exchanges were small. 

The FTSE 100 also failed to make strong progress above recent record levels despite an early push higher. After a positive week so far for the shares of the biggest UK retailers, investors reacted strongly against the latest updates from widely held shares Tesco (TSCO) and Mark & Spencer (MKS). Both companies’ share prices slumped over 5% as Tesco came in below expectations despite posting record sales over Christmas.

Mark & Spencer’s quarterly update was described by its chief executive as “mixed” – total UK revenue was down 1.4% on a like-for-like basis, while clothing and home was nearly 3% lower than the same period the year before. Third-quarter revenue was nearly 10% lower at £309 million. The out-of-favour housebuilder sector was in focus again, as Barratt Developments (BDEV) shares were sold off despite a 6.5% increase in selling prices in 2017

North America

In US economics, weekly jobless numbers will be released, as will producer price data. The week’s biggest release will be inflation data for December on Friday, which is expected to show a softening on November’s rise in the consumer price index. In earnings, Delta Airlines (DAL) reports before the market open. Tomorrow sees the start of the fourth-quarter earnings season, with JPMorgan (JPM) kicking off. Energy and tech firms are expected to have had the strongest quarters, although big companies will have to take account of recent tax changes pushed through by the Trump administration. 

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