Asia
Hong Kong’s Hang Seng index continued its strong start to the year with another record close just below 33,000 points. The index is up 10% since the start of the year. The Chinese elements of the Hong Kong market, the Hang Seng China Enterprises Index, also managed a record 19 days of closing gains. Upbeat Chinese data, coupled with record gains on US markets, are two of the factors behind the bullish sentiment in the region.
But a softening in the dollar against the yen meant that Japanese markets went into retreat on Wednesday. The price-weighted Nikkei index fell by nearly 1%, while the Topix lost around 10 points to 1,901.
Europe
Dollar weakness also had an impact on the UK’s FTSE 100, which dropped on the day but still managed to hold above 7,700 points. The pound broke through the key $1.40 mark to recover levels last seen since before the EU referendum vote in June 2016.
UK jobs’ figures showed a rise in those employed to a new record, but again wages were the disappointment – the rise in average earnings of 2.5% was still lagging inflation at 3%.
Accountancy software firm Sage (SGE) was one of the biggest fallers on the FTSE 100 after a trading update.
In the eurozone, the flash or provisional estimates for the Purchasing Managers’ Index (PMI) was mixed: while both services and manufacturing sectors are expanding at a healthy rate, manufacturing growth came in below forecasts.
The European Central Bank meets tomorrow and investors will be keen to hear if the ECB gives a timescale for when its bond purchases – which have been halved this month – will be completely scaled back. The ECB is behind the Federal Reserve and Bank of England in the move global move away from ultra-loose monetary policy.
North America
Among today’s biggest companies reporting are Dow Jones stalwarts General Electric (GE) and Ford (F). Cruise company Royal Caribbean (RCL), whose shares rose over 20% in 2017, also reports earnings before the market opens. After the market close, Whirpool (WHR) reports. The Michigan-based dishwasher firm and solar cell maker has benefited from President Trump’s move to slap import tariffs on equivalent Chinese companies – the company’s shares are up 10% to around $172 a share since the start of the week.
The dollar’s weakness has set the agenda for financial and commodity markets today. For those for believe the Trump administration is keen for the US currency to depreciate received further evidence today. Treasury Secretary Tim Mnuchin told delegates at the Davos summit today that a weaker dollar is good for “trade and opportunities”.
Meanwhile, the Trump nomination for the Federal Reserve chair, Jerome Powell, was confirmed by the Senate today.
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