Asia
Escalating conflict between India and Pakistan brought geopolitical risk back on the agenda for Asian investors. Still the market reaction was relatively muted: a flight to safety pushed up the Japanese yen but the Nikkei still managed a modest rise on the day, while the BSE Sensex was slightly softer. Pakistan’s KSE 100 index was the worst affected, shedding 4% after reports of both countries’ planes being shot down.
Asia markets also took their cue from the softer close on Wall Street, although China’s Shanghai Composite Index inched towards 3,000 points, a level seemingly unthinkable at the end of 2018.
Europe
Markets in Europe caught the global mood of doubt, with the UK’s FTSE 100 also weighed down by a stronger pound, which has been on a tear since talk of a Brexit delay emerged this week. Sterling has moved above €1.17 and $1.33 as traders downplay the risk of a no-deal Brexit.
Marks & Spencer (MKS) confirmed that it is planning a joint venture with Ocado (OCDO). The reports sent Ocado shares soaring yesterday but Marks & Spencer’s slid sharply today as it revealed the downside for investors: a rights issue and a cut in the dividend.
North America
US equity futures are weaker for today as investors mulled the revival of India-Pakistan tensions, softer corporate earnings, the start of the North Korea summit and testimony from Federal Reserve chair Jerome Powell.
Powell delivers his twice-yearly testimony to the House of Representatives panel on Wednesday today, following on from his Senate appearance yesterday. Powell’s comments that the economic data points were weakening confirmed the central bank’s new cautious approach.
In economics, the December Advanced Goods Trade Balance for the US is in view today before the market opens.
The Trump-Kim summit starts in Vietnam today amid much diplomatic fanfare. Beyond a general feeling of goodwill, it is hard to see how the event can beat 2018’s historic meeting – or overshadow the real business of the US-China trade talks.
In figures due today, Canadian inflation is expected to have dropped back from 2% to 1.4% from December to January, as measured by the consumer price index. Canada’s economy is forecast to have grown by 1.4% in December from the same month in 2017. The GDP data is due on Friday.
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