Global Market Report - September 13

Asian equities rebounded after a long losing run amid rising hopes of more trade talks between China and the United States

Morningstar 19/09/2561

Global Market Report

Asia

Asian equities have been searching in recent trading sessions for macro news to break the downward pressure, and today it arrived in the form of proposed trade talks between the US and China. News of a potential olive branch offered by Treasury Secretary Steve Mnuchin to the Chinese government helped domestic equities bounce back – the Shanghai Composite Index rose 1% on the day, and the recently under pressure Hang Seng index rose over 2% to move back above 27,000 points.

A softening of the yen against the dollar helped give Japan’s equity market a small boost. The Nikkei 225 is close to 23,000 points, but the index has struggled to maintain above this level in 2018; the peak this year above 24,000 has seemed a long way off in recent months, and a brief move above 23,000 points in May was shortlived.

Europe

The Bank of England and European Central Bank both announce interest rate decisions today but neither are expected to make any change to rates or quantitative easing.

The Bank has two more meetings left after this one and the odds are against another interest rate rise in 2018 while Brexit negotiations continue. Mary Carney is staying on as Governor at the Bank, the Chancellor confirmed this week. The pound has held above $1.30 this week as optimism increases about the Brexit process. Today Brexit Secretary said that the UK would not pay the “divorce bill” owed to the European Union in event of a no-deal Brexit. But the pound faces more volatility if rumours of a leadership challenge to the Prime Minister materialise.

The FTSE 100 drifted lower, against the generally positive direction of European stock markets, with Marks & Spencer (MKS) showing the biggest reaction to John Lewis & Partners’ 99% fall in profits. With Debenhams (DEB) shares under pressure in recent days amid concerns over its future, it’s been a turbulent week for department stores, listed or otherwise. 

North America

The latest product launch from Apple (AAPL) generated its usual excitement in the media but the after-hours response from the company’s shares was muted. Morningstar analysts raised their fair value estimate for Apple shares from $175 to $200 on expectations of higher prices for the phones.

US inflation for August is one of the highlights of the economic calendar this week, with data released today. The Consumer Price Index is expected to have risen by 2.8% in August, against a yearly rise of 2.9% in July. Canada’s CPI number for August is due to next week. Retail sales for August will also be in view on Friday.

Adobe (ADBE) is one of the biggest US companies to report this week and releases numbers today.

 

 

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