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Global Market Report - October 25 2017

Japan's Nikkei ended its record 16 day winning streak, while US investors look ahead to earning from Visa, Coca-Cola and Boeing

James Gard 25 October, 2017 | 11:04AM

Asia

Japanese equity markets failed to achieve a record-breaking 17th consecutive day of gains as a raft of earnings from domestic companies were not so well received by investors, despite better-than-expected results at companies like Hitachi High-Technologies (8036). A stronger yen against the dollar also held back market gains.

The Nikkei and Topix indices closed down at 21,707 and 1,751 respectively. China’s CSI 300 index, which includes shares from Shenzhen and Shanghai exchanges, pushed towards the 4,000 points level last seen in late 2015. 

Europe

In London, the FTSE 100 reacted negatively to news that the UK economy grew faster than expected in the third quarter, with a rise of 0.4% in GDP coming in against forecasts for 0.3% growth. Defensive stocks such as British American Tobacco (BATS) were in favour – the company said today that its revenue would be double forecasts for next year, fuelled by growth in “alternative” smoking products such as e-cigarettes.

Miners were sold off, among them Chilean copper miner Antofagasta (ANTO), whose shares were over 4% lower as sterling gains following the GDP news took the shine off dollar earners.

Lloyds Banking Group (LLOY), kicking off UK bank earnings season, released positive numbers for the third-quarter, posting higher profits, rising capital levels and no new PPI claims during the period. The company also pledged to pay a “progressive and sustainable” full-year dividend. Nevertheless, investors focused on fears over expanding consumer credit - and a rise in loan defaults - especially with a possible interest rate rise next week. The bank's share fell at the open but have since recovered.

Marks & Spencer (MKS) shares were nearly 1% lower after its clothing and beauty director resigned.

European indices lacked strong direction as investors looked ahead to Thursday’s European Central Bank meeting, where the ECB could announce a reduction or tapering in its €60bn a month bond purchases. 

North America

On Tuesday, stronger earnings - especially from the likes of Caterpillar (CAT), whose stock price rose 5% on the day - pushed the Dow Jones to new record levels. More earnings from US blue-chip names like Visa (V), Coca-Cola KO) and Boeing (BA) will test the strength of the prevailing bullish sentiment on Wall Street.

In US economics, durable goods orders for September will be in focus, as will home sales for the same month, and weekly crude oil inventories.

In Canada, the central bank is expected to leave interest rates unchanged at 1%. 

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
Antofagasta PLC915.00 GBX0.49
Boeing Co289.94 USD2.39
British American Tobacco PLC65.10 GBP2.28-
Caterpillar Inc143.42 USD-0.24
Coca-Cola Co45.29 USD-0.09
Hitachi High-Technologies Corp4,595.00 JPY-1.92-
Lloyds Banking Group PLC0.85 GBP0.18-
Marks & Spencer Group PLC312.70 GBX0.26-
Visa Inc Class A113.46 USD0.97
About Author

James Gard  is subeditor for Morningstar.co.uk