Global Market Report - January 15

World equities rose today after China pledged to stimulate the economy with tax cuts, while JP Morgan continues earnings season

Morningstar 18/01/2562

Global Market Report

Asia

Markets in Asia rose strongly on Tuesday after China promised to intervene in the economy through tax cuts. While lending data in China beat expectations today, recent inflation and trade statistics point to a loss of momentum in the world’s second largest economy. Hong Kong’s Hang Seng was the biggest gainer, rising over 500 points or 2% to 26,830. The Shanghai Composite Index was up over 1% to close at 2,570 points. The broad-based CSI 300, which replicates Shanghai and Shenzhen exchange’s top 300 stocks, was up nearly 2% on the day.

Europe

The FTSE 100 opened above 6,900 points but has since faded, and in midmorning trading is up nearly 15 points at 6,869. Ahead of the crucial Commons vote on Brexit tonight, the pound briefly nudged above $1.29 but then dropped back to $1.285. Whatever happens today, and experts are predicting that Theresa May’s deal will be rejected by MPs, currency traders are braced for sterling volatility in the coming days. The idea of an “acceptable” defeat has taken hold, which will allow the Prime Minister to continue in her job, while hard or no-deal Brexit is avoided through political fudge and compromise. But events of recent months and since the Brexit vote in 2016 suggest that betting on the status quo can be costly.

Britain’s largest housebuilder (PSN) raised its full year profit forecast amid a rise in revenues and selling prices. But the shares drifted lower today after a recent strong run for housebuilding stocks, helped by last week’s positive trading update from Taylor Wimpey (TW.)

Eurozone indices were moderately higher ahead of a speech by European Central Bank President Mario Draghi, who will present the ECB’s 2017 annual report in Strasbourg.

North America

US stock futures point to a rise at the open as China’s promised stimulus lifts world equities.

JP Morgan (JPM) continues the bank earnings season after Citigroup (C) beat analyst forecasts yesterday. Netflix (NFLX) also reports this week. Morningstar analysts rate the stock as one star, which means that it is significantly overvalued. The company’s share price has bounced sharply since the end of 2018.

Oil prices remained buoyant above $51 a barrel.

In economics, advance retail sales data is due on Wednesday. This is expected to show a drop in growth from 0.2% in November to 0.1% in December on a month-by-month basis. Canadian inflation numbers are due on Friday.

 

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