Global Market Report - March 7, 2018

The exit of Trump key economic adviser Gary Cohn has unsettled world markets

Morningstar 08/03/2561

Asia

Another high-profile departure from the Trump administration provided an unwelcome backdrop for global investors on Wednesday. Sentiment is still very fragile after the sharp selloff at the start of the year and amid ongoing fears of a global trade war, so the loss of economic adviser Gary Cohn is very poorly timed. The dollar’s fall against the Japanese yen overnight made any attempts by the Nikkei 225 and Topix to recover some lost ground even harder. Global carmakers such as Toyota (7203) have seen their share prices weaken in the context of possible US tariffs on steel and aluminium goods. There is a flurry of Japanese data out on Thursday morning, including economic growth figures for the fourth quarter.

Hong Kong’s Hang Seng joined in the global weakening trend, losing over 1% on the day, and China’s Shenzhen lost a similar amount in percentage terms. Australia’s All Ordinaries was also lower after the country’s GDP missed forecasts.

Europe

Eurozone exchanges were down modestly on yesterday’s close after regaining some ground throughout the morning. A similar pattern was seen with the FTSE 100, which opened lower but just managed to move into positive territory by 11am local time.

Rolls-Royce led the FTSE 100 gainers after in turned a £4 billion loss in 2016 into a 2017 profit of a similar magnitude. Investors were cheered by ongoing restructuring plans, despite ongoing problems with some of its aircraft engines.

Profits and dividends were up at FTSE 100 insurer Legal & General (LGEN), which currently yields over 5%.

North America

Canada’s central bank is expected to leave interest rates at 1.25% today.

Investors’ attention will be focused on the stock market reaction to the resignation of Gary Cohn and what that means for Trump’s tariff plans. Futures suggest a 300-point drop in the Dow Jones Industrial Average at the open.

In terms of earnings, retailers will be in focus today, especially Costco (COST), which reports after the market closes.

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