Global Market Report - January 17

The potential criminal probe into China's Huawei has unsettled US-China trade relations and rattled world markets

Morningstar 18/01/2562

Global Market Report

Asia

The prospect of more US-China talks failed to push up Asia-Pacific equities on Thursday with indices in Japan, China and Hong Kong drifted lower. This turn lower was also in the face of a banks-fuelled rally on Wall Street overnight.

Reports of a possible US criminal probe into China’s Huawei took the edge of these otherwise positive developments for world markets.

Japanese inflation data is due on Friday.

Europe

With the UK Government surviving a vote of new confidence yesterday, it was business as usual in the markets. The FTSE 100 continued its weaker trend despite Wall Street’s higher close, losing around 40 points to 6,824. Sterling also retreated after recent gains, drifting away from $1.29 and below €1.13.

European markets tracked Asia’s weakness, with Germany’s DAX one of the biggest fallers in percentage terms. Still, losses were relatively modest, with falls below 0.5% on the day.

North America

While the recent bank earnings have not been unanimously positive – JP Morgan (JPM) for example, missed Wall Street forecasts – the stock market reaction has been notable. Goldman Sachs (GS) forecast-busting results pushed the share price up nearly 10% on Wednesday. Morgan Stanley (MS) earnings are due today before the market opens. Perhaps there is life in this bull market yet? Tech earnings are due soon and the scrutiny of sector leaders such as Amazon (AMZN), Apple (AAPL) and Facebook (FB) will again be intense.

Netflix (NFLX) earnings are due after the market closes tonight. Its recent price rise has been well received the market already this week so any upside surprises are likely to support the share price further.

In economics, monthly housing starts and building permits are due, as well as weekly jobless claims. Delayed US retail sales data for December showed a drop in growth to 0.1%, compared with 0.2% the month before. The US Government shutdown, now into its fourth week, is holding back the publication of key economic stats.

Canadian inflation numbers are due on Friday. After the market opens on Friday, the University of Michigan sentiment index for January is released.

 

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