Global Market Report - September 19

Asian shares rebounded on Wednesday on rising optimism that the US and China can resolve their differences over trade

Morningstar 24/09/2561

Global Market Report

Asia

After many weeks of Asia-Pacific investors selling equities over trade war fears, there is now a renewed optimism that China and the United States can resolve their differences. A day after President Trump signed off $200 billion in new tariffs, China responded by slapping an equivalent tariff rate of 10% on US goods. Beijing said at the same time that China is open for business around the world, although Alibaba founder Jack Ma warned that the US-China trade spat would last 20 years.

Hong Kong’s Hang Seng index rose over 1% on the day, as did China’s Shanghai and Shenzhen exchanges.

Japan’s Nikkei caught the prevailing mood, despite the yen remaining steady after the Bank of Japan left monetary policy unchanged.

Europe

A surprise jump in UK inflation grabbed the attention of currency investors, who pushed the pound up above $1.32, the highest level since July. This rise in sterling weighed on the dollar earners of the FTSE 100, and the index was held just below 7,300 points in midmorning trading.

The Bank of England does not meet in October, so November’s Inflation Report will be the next opportunity the Bank gets to react to the rise in the cost of living, which hit a six-month higher of 2.7% in August. The Bank has been relatively sanguine about inflation of late and is not expected to raise interest rates until spring 2019 at least.

Eurozone exchanges tracked the global mood more closely than the FTSE 100, with modest rises approaching midday.

European financial media is focused this morning on the news that the head of Danske Bank (DANSKE) has resigned after an internal investigation found that $200 billion could have been laundered through its Estonian branch. Copenhagen-listed Danske lost 7% of its value today as the scandal engulfed the company.

North America

Tesla (TSLA) shares skidded lower in Tuesday trading amid reports that the company faces a criminal probe following Elon Musk’s tweets about taking the company private – a move that sent the shares higher and squeezed the company’s numerous short sellers.

Bed Bath & Beyond (BBBY) reports numbers on Thursday.

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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