Global Market Report - August 31

World shares were under pressure on the last trading day of the month with global investors grappling with multiple trade worries

Morningstar 05/09/2561

Global Market Report

Asia

Trade worries once again rose to the top of the agenda on the last trading day of the month. While there has been progress in NAFTA negotiations, a China deal is now perceived to be less likely. President Trump’s threat to pull the US out of the World Trade Organisation has not helped the nervous mood among global investors. A weakening overnight on Wall Street was another contributing factor to a downbeat end to August. Hong Kong's Hang Seng was the biggest faller in percentage terms, with China's Shanghai Composite not too far behind.

A strengthening in the Japanese yen also harmed the case for Japan equities, but the Nikkei was only modestly lower on the day.

Europe

Trump cast doubt on whether the United States could agree a trade deal with Europe and that helped fuel further losses in Eurozone markets on Friday. Eurozone inflation was softer than forecast in August. The estimate for the Consumer Price Index came in at 2% on a year on year basis, compared with expectations of a rise of 2.1%, the same reading in July.

The comments also fed into the current high-stakes Brexit negotiations between Brussels and the UK, which showed some signs of progress earlier in the week. The pound rose earlier in the week, moving back above $1.30, on Chief Negotiator Michel Barnier’s hints of a potential deal – but has since dropped back. The FTSE 100 dropped below 7,500 points on Friday, despite a big jump in the shares of Premier Inn and Costa Coffee owner Whitbread (WTB). The company agreed to sell Costa Coffee to US drinks giant Coca-Cola for nearly £4 billion, having bought the chain in 1995 for £19 million.

The jump in the shares was explained by a much higher sale value than analysts had expected, and the idea that Britain may be approaching “peak coffee” with most British high streets boasting at least one coffee chain.

North America

US markets had earlier in the week managed to insulate themselves from the wider global narrative of trade fears, with the S&P 500 and Nasdaq hitting new records. However, yesterday’s lower close is set to be followed by a weaker open on Friday.

Today sees the release of the University of Michigan sentiment index for August.

Earnings are thin ahead of the extended Labor Day weekend, which sees the New York Stock Exchange and Toronto Stock Exchange close for the day.

 

 

About Author

Morningstar