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Global Market Report - October 12 2017

US bank earnings season kicks off today, while eurozone equities struggled to make gains after the euro strengthened against the dollar

James Gard 12 October, 2017 | 11:01AM

Asia

Japanese markets rose again on Thursday. The country’s Nikkei index closed higher to threaten 21,000 points, a level last seen in the summer of 1996. The region’s indices were all in positive territory by the close of trading, including Hong Kong’s Hang Seng, China’s CSI 300 and South Korea’s Kospi. Australia’s ASX hit a three-and-a-half month high.

Election campaigning continues in Japan ahead of October 22’s vote, while China’s political elite prepares for the key Communist Party meeting next Wednesday. 

Europe

Europe’s dominant political issue of the moment, Spain’s Catalonian crisis, continues to unsettle equity and currency investors. Spain’s prime minister, Mariano Rajoy, said last night that the “nuclear option” of the central government seizing control of Catalonia’s government remains an option.

Germany’s Dax index slipped in morning trading, just below record high levels set earlier in the week, as the euro’s strength took the edge off equity valuations across the eurozone. The European Central Bank meets later this month but its president, Mario Draghi, will speak at meetings of the World Bank and International Monetary Fund in Washington today.

Eurozone industrial production figures for August beat forecasts on a month on month and year on year basis.

In London, the FTSE 100 remained above 7,500 in morning trading, led by budget airline easyJet (EZJ). Satellite broadcaster SKY (SKY) has its annual general meeting today, where chairman James Murdoch is likely to face an investor backlash over his position, and against executive pay at the company. 

North America

US banks Citigroup (C) and JP Morgan (JPM) kick off earnings season today after a recent lull in big corporate releases. Analysts expect Citigroup to deliver earnings per share (EPS) of $1.29 and JP Morgan $1.67. Tomorrow sees the release of Bank of America (BAC) and Wells Fargo (WFC) earnings before the market open.

Outside of the financial sector, Domino’s Pizza (DPZ) also reports quarterly earnings.

Last night’s Federal Reserve minutes for September increased the already high likelihood of a next interest rate rise at its December meeting. Nevertheless, America’s low inflation puzzle is set to continue, policymakers believe, which put some pressure on the dollar. Friday’s consumer price index numbers for September thus take on an even greater significance – the consensus forecast is for a 2.3% rise in the cost of living year on year, against 1.9% the previous month. The Fed’s inflation target is 2%.

Thursday sees the release of initial weekly jobless claims to October 7 and continuing claims to September 30.

In Canada, new house prices for September will be released. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Bank of America Corporation27.16 USD-0.04
Citigroup Inc73.53 USD0.00
Domino's Pizza Inc182.63 USD-1.87-
easyJet PLC1,307.00 GBX-0.98-
JPMorgan Chase & Co99.34 USD-0.17
Wells Fargo & Co54.91 USD-0.02
About Author

James Gard  is subeditor for Morningstar.co.uk