Global Market Report - November 20

Tech stocks were out of favour globally after the Nasdaq's slide, while European investors digested news surrounding Renault boss Carlos Ghosn

Morningstar 21/11/2561

Global Market Report

Asia

A big slide on the Nasdaq on Monday set the tone for 2% plus falls in China and Hong Kong stock markets on Tuesday.

Hang Seng listed Tencent (00700) felt the brunt of the global tech sell-off, shedding over 3% on the day. At around 281 Hong Kong dollars, the tech bellwether’s stock is off around HKD 200 this year.

The Shanghai Composite Index, which briefly moved back 2,700 points yesterday, shed 2.1% today to 2,645 points. Hong Kong’s Hang Seng lost over 500 points or 2% to slide back below 26,000 points.

Japan’s Nikkei 225 was also affected by the region’s falls, shedding 1% to 21,583 points. Shares in Tokyo-listed Nissan slumped on the scandal enveloping its chairman Carlos Ghosn

Europe

Investors in Europe transfixed by the scandal surrounding Renault chairman and chief executive Carlos Ghosn, particularly as it affects the French state, with its 15% stake in the carmaker. The scandal also affects Nissan and Mitsubishi as he is also chairman of both carmakers.

The French finance minister Bruno Le Maire said that Ghosn should not be leading Renault after allegations that the car executive understated income. Ghosn was arrested in Japan yesterday.

Europe’s indices tracked the global mood, with losses of under 1% in France and German stock exchanges.

The FTSE 100 sunk below 7,000 points as the pound traded within a band between $1.2840 and $1.2860 and amid signs of a tentative recovery in sterling against the dollar. The fear that gripped currency traders last Thursday appears to have receded for now as rebels against Prime Minister Theresa May failed to achieve enough support to oust her. A solid, almost defiant speech by May at the CBI conference also seemed to support the “business as usual” case. A key Brussels summit is looming, however, and this could be another bruising encounter for the PM.

On the subject of Brexit, full-year results from easyJet (EZJ) suggested that British travellers maintain their appetite for short-haul budget flights to the continent. Profits for the airline were up over 41% on the year, but still the airline’s shares sunk 4% on a weaker day for the wider market.

North America

Nasdaq’s 3% fall on Monday put traders on notice that the build-up to Thanksgiving will not be quiet on the markets. The Nasdaq FANG index fell even sharper on Monday, and analysts are focusing on Apple (AAPL), which has lost 20% of its value so far year. Apple has also retreated from its $1 trillion valuation. 

Medtronic (MDC), Lowe’s (LOW) and Target (TGT) report this week.

In economics this week, Durable Goods Orders for October will be released on Wednesday, with the forecast for a drop of 2.5% against growth of 0.7% the previous month. The final reading of the University of Michigan sentiment index for November is also due on Wednesday.

In Canada, inflation figures are due on Friday. Federal finance minister Bill Morneau puts out his economic statement on Wednesday.

 

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