Global Market Report - November 2

Reports of a possible trade deal between the US and China sent world markets sharply higher on Friday, while investors await US jobs data

Morningstar 05/11/2561

Global Market Report

Asia

Hong Kong’s Hang Seng surged ahead more than 4% on Friday, a gain of over 1,000 points, as global markets rallied on increasing hopes of a trade deal between the United States and China. The index is now at 26,456 points, still below the level at the start of October, and way off the near 33,000 points earlier in the year.

China’s Shanghai Composite Index, which has similarly been battered by this year’s volatility, rose nearly 3% on Friday. Again, the index is significantly lower than at the start of the year.

After a bruising year for Asia-Pacific investors, they jumped on reports that President Trump is planning to reach an agreement with China’s Xi Jinping ahead of the G20 summit in Argentina on the last day of November.

Japan’s Nikkei 225 rose over 2.5% to 22,243 points, but this 500+ point gain was a long way off from erasing October’s losses.

Europe

The FTSE 100’s participation in the global rally was a little halfhearted given the strong gains in Asia and the rest of Europe, with the index rising less than 1% to 7,165 points. Currency factors played a large part, with the pound moving above $1.30 on talks of progress in Brexit negotiations. Of course, traders have been in this position before so gains in sterling could easily be shortlived with the next instalment of Brexit reports. The Bank of England’s meeting yesterday added some ballast to the buy sterling argument.

UK construction data for October was better than forecast, compared with a weaker-than-expected Purchasing Managers’ Index (PMI) for manufacturing on Thursday. The UK services PMI is due on Monday.

Germany and France indices posted gains in excess of 1% on the day.

North America

An eventful week in the markets and geopolitics is capped by US employment numbers for October. The US is expected to have added just under 200,000 jobs to the non-farm payrolls last month.

Canada’s October unemployment numbers for October will also be in view.

The tech earnings season is drawing to a close after Apple (AAPL) reported results last night. The iPhone maker’s shares slumped in after-hours trading as it said that this quarter’s revenue will come in at the lower end of analyst forecasts. Like Amazon (AMZN), profit and revenue rises year on year were impressive, but investors and analysts are focused on how the final quarter plays out.

New York-listed China internet giant Alibaba (BABA) reports earnings today. Unlike many of the US tech stocks, Morningstar analysts give Alibaba a five-star rating, meaning that it is significantly undervalued.

Oil giant Exxon Mobil (XOM) also reports earnings.

 

 

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