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Global Market Report - October 27 2017

Japan's Nikkei closed at a new 21-year high, while US investors expect the share prices of tech giants such as Amazon and Google to surge when the market opens

James Gard 27 October, 2017 | 11:10AM

Asia

Japan’s Nikkei index posted one of its biggest daily rises in recent weeks, closing more than 1% higher above 22,000 points, a fresh 21-year high. Financial firms were on the up, while technology companies were boosted by impressive earnings from US counterparts. A softening in the yen against the dollar also helped boost the case for Japanese equities.

Nevertheless, Japan’s struggles to spur economic growth and curb deflationary pressures were in focus as inflation came in below expectations, with the cost of living as measured by the Consumer Price Index actually falling 0.2% in October, against a forecast of a 0.1% rise on a year on year basis.

China’s CSI 300 index was around 100 points higher than at the start of the week as equity markets firmed on a strengthening of Chinese leader Xi Jinping’s power base at the Communist Party Congress.

In contrast, Hong Kong’s Hang Seng index capped a mixed week by closing down on the day. 

Europe

Markets in continental Europe are higher on Friday morning after the European Central Bank revealed that its withdrawal of monetary stimulus would be a gradual process. Investors were also buoyed by upbeat comments from ECB chief Mario Draghi on the state of the eurozone economy. A weakening euro against the dollar helped boost indices such as Germany’s DAX and France’s CAC 40.

On the FTSE 100, Royal Bank of Scotland (RBS) shares were the biggest riser in early trading as the bailed-out bank posted a profit of £392 million in the third quarter, compared with a loss of £496 million in Q3 2016. 

North America

After-hours reports from Google parent company Alphabet (GOOGL), Amazon (AMZN) and Microsoft (MSFT) continued the upbeat mood of this quarterly earnings season. All of these companies beat revenue and earnings per share forecasts – and in after-hours trading the share prices soared to record highs. Amazon’s stock price surged over 7% in after-hours trading, pushing it above $1,000 a share for the first time.

Today’s earnings are focused less on technology and more on traditional drivers of the US economy: Dow Jones stalwart Exxon Mobil (XOM) is due to report before the market opens, with forecast earnings per share of 86 cents and revenues for the third quarter of just over $63 billion.

The US GDP figure for the third quarter, released before the market opens, is the highlight of the week in terms of economics. The forecast is for growth of 2.6% on an annualised basis, compared to a rise of 3.1% in the second quarter of 2017. Also released today is the University of Michigan consumer confidence survey.

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
Alphabet Inc A1,050.50 USD0.16
Amazon.com Inc1,164.09 USD-0.08
Microsoft Corp85.33 USD-0.29
Royal Bank of Scotland Group (The) PLC282.10 GBX0.43
About Author

James Gard  is subeditor for Morningstar.co.uk