Global Market Report - September 18

Chinese stock markets rebounded on Tuesday amid relief that President Trump's latest $200 billion trade tariffs on China goods were not harsher

Morningstar 19/09/2561

Global Market Report

Asia

Chinese stock markets broke their recent losing streak with a strong rebound on the same day that President Trump signed off on imposing a 10% tariff of $200 billion of Chinese goods from next week. A mixture of factors may have been at work in the 2% rise in China’s Shanghai Composite and CSI 200 indices, including a relief rally that the tariff was not larger, and that shares have perhaps been oversold in anticipation of these trade moves from the United States.

Former Templeton Emerging Markets fund manager Carlos Hardenberg said yesterday, as he launched a new fund with Mark Mobius, that emerging markets are at multi-year lows and “a huge degree of pessimism” is already priced into markets.

Nevertheless, the next few months are expected to herald ongoing tit-for-tat moves by the US and China, with little diplomatic progress in sight as yet. The Shanghai index has so far struggled to hold above the 2,700 level in recent weeks and closed just below this today.

Hong Kong’s Hang Seng rose modestly too, as did Japan’s Nikkei, which reopened after a public holiday. Japanese inflation figures are due at the end of the week.

South Korea’s Kospi nudged higher as the two leaders of North and South Korea meet.

Europe

European exchanges were modestly higher after Asia’s bounce but there was little in the way of overarching economic or corporate news to drive markets higher.

The FTSE 100 managed to hold above 7,300 points after an indifferent open. Ocado (OCDO), which entered the FTSE 100 this summer, led the morning risers after a trading update revealed a rise in revenues. The company’s shares rose over 4% on Tuesday morning – the retailer has long been the target of shortsellers but the share price doubled in the last six months after a big surge since May.

UK inflation data for August is due on Wednesday, although Brexit seems to have overtaken inflation targeting in the Bank of England’s list of worries in recent months.

North America

In terms of companies reporting, Oracle (ORCL), which reported results after hours on Monday, saw its shares drop over 3%.

Today General Mills (GIS) reports earnings.

In terms of economics, housing starts for August are due on Wednesday.

Canadian inflation data for August is due on Friday, with the cost of living – as measured by the Consumer Price Index (CPI) – expected to have dropped from 3% to 2.8%.

Looking ahead to next week, the Federal Reserve is still on track to make its third interest rate rise of the year.

 

 

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