Global Market Report - May 10, 2018

Iran and oil are again the big themes for global investors today ahead of the Bank of England's interest rate decision and US inflation data

Morningstar 14/05/2561


The fallout from the United States’ withdrawal from the Iran nuclear deal is still dominating world politics and stock markets. Asia-Pacific indices followed the lead of US markets, which were boosted by rising energy stocks as the oil price hit a near four-year high. Hong Kong’s Hang Seng was again the biggest riser in the region, tracking the Nasdaq’s 1% gain on the day. China’s CSI 300, which replicates the performance of the Shenzhen and Shanghai indices, was up over 0.5% on the day after a late rise towards the close. China’s Consumer Price Index dropped below 2% to come in at 1.8% in April.

The US dollar made a move towards the 110 yen mark, which would have been the first time this year the currency pair had reached this level. Again the Japanese equity nudged higher as the currency supported the domestic market. The global move higher was probably a stronger factor, however, as currency effects have been rather muted in Japan in recent weeks.


FTSE 100 stocks were on the move on Thursday on a busy day for corporate news. Royal Bank of Scotland (RBS) was initially the biggest riser as it announced that its settlement with the US Department of Justice was lower than analysts had expected. The deal was seen as the watershed for the state-owned bank resuming dividends and returning to private hands after a decade under government control.

Shares in telecoms firm BT (BT) were off sharply after it announced restructuring that would costs 13,000 jobs and lead to the company move its HQ out of London. Shares hit a six-year low but the company maintained its dividend.

Next (NXT) was big riser on Thursday morning as it raised its full-year profit guidance after a stronger-than-expected first quarter of trading.

The biggest economics news is due at midday today with the Bank of England’s interest rate announcement. Expectations of a quarter point rate rise have been scaled back in recent weeks but there is still the prospect for a surprise from the monetary policy committee. The Bank is also expected to downgrade its predictions for economic growth for this year in its quarterly Inflation Report.

North America

Usually oil prices and the dollar are negatively correlated but in recent days both have risen as the US currency has staged a comeback after many months of weakness against sterling, the Japanese yen and the euro. The US administration had even been on record talking the Greenback down, most notably Treasury Secretary Steve Mnuchin at Davos earlier in the year.

After sliding from nearly $90 in early February to $72 in March, shares in Exxon Mobil (XOM) have spiked in recent days to just below $80 a share. The oil giant is trading below its fair value, according to Morningstar analysts.

Companies reporting today include in-favour tech stock Nvidia (NVDA), whose shares have recently hit a record high.

US inflation data will be released today amid renewed scrutiny from policymakers and analysts over the rising cost of living. Consumer prices are expected to have risen by 2.2% in April from the same month in 2017, higher than the 2.1% rise in March.


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