Global Market Report - July 4, 2018

Service sector growth figures kept European investors occupied on a day when there is no US trading

Morningstar 10/07/2561


China’s yuan continued to recover on Wednesday after the central bank’s promise to maintain stability in the Chinese currency. But this was not enough to lift China’s Shanghai Composite Index, which slid another 1% to close at 2,759 points. Better-than-expected services data for June also failed to lift investors’ spirits.

Hong Kong’s Hang Seng fell by a similar amount, as the tech-heavy index followed the lead of the Nasdaq’s, which was the worst performing of the US markets yesterday.

The trade tariff deadline of July 6 looms over world markets, with China likely to move first, according to reports.


Markets in the eurozone got off to a mixed start after weakness in the US and Asia overnight. The eurozone services PMI was slightly better than expected at 55.2 but individual country purchasing managers’ indices were mixed: Italy and Germany beat forecasts while France came in below expectations. Nevertheless, France’s CAC 40 managed to creep into positive territory approaching midday after a softer start.

In midmorning trading, the FTSE 100 moved closed to flat on the day, led by Anglo American (AAL), BT (BT.) and Sainsbury’s (SBRY). The supermarket chain’s overall sales for the quarter were marginally higher than the same period last year, but online groceries and Argos were strong performers. The company has also secured funding for its Asda deal.

The service sector PMI was the last of the three purchasing managers’ indices to be released. Britain’s dominant economic sector beat expectations with an index figure of 55.1 against predictions of 54. With construction and manufacturing sector readings coming in above expectations for the last month of the second quarter, pundits started to build expectations for an August interest rate rise. The official GDP figure is released at the end of July but there are signs that the UK economy rebounded in this most recent quarter after a dire start to the year, helped by warmer weather and the start of the World Cup.

North America

The New York Stock Exchange is closed for the July 4 public holiday. Market investors are no doubt glad for a small pause this week ahead of Thursday’s Federal Reserve minutes, Friday’s non-farm payrolls and the start of earnings season next week. The US economy is expected to have added just under 200,000 jobs in June, down from over 220,000 in May. Many indicators are showing a strong performance from key parts of the US economy, so a forecast-beating jobs number on Friday is a possibility.



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