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Global Market Report - November 28 2017

UK banks passed their annual stress tests, while US investors get to hear the view of the new Federal Reserve chair Jerome Powell

James Gard 28 November, 2017 | 11:03AM

Asia

An uncertain start to the trading week on Wall Street failed to give Asian markets much of a lift on Tuesday morning, although China’s Shanghai Composite index managed to end higher after Monday’s sharp selloff. Japan’s indices were slightly lower on day as the nation’s equities failed to reach their 25-year highs seen just weeks ago.

Europe

UK banks were in focus as the Bank of England released the results of its annual stress test, which models how firms would cope under certain external shocks: for example, a 33% fall in house prices, a rise in interest rates or unemployment, and a sharp fall in GDP.

Unlike last year, no banks needed to raise extra capital, and firms could cope in the event of a “disorderly” or no-deal Brexit. Banks must hold an extra £6 billion after Brexit, the Bank stipulated.

In terms of the share price reaction, HSBC (HSBA) was the biggest winner, while Lloyds Banking Group (LLOY) was the biggest loser.

Airline stocks have had a good run recently, especially easyJet (EZJ), which last week hit a six-month high on record passenger numbers and expectations that it would grab the Luton airport slots left by collapsed airline Monarch.

British Airways owner International Consolidated Airlines Group (IAG) benefited from the Monarch effect today as it confirmed the purchase of slots at Gatwick Airport sold by administrators. The airline firm’s shares were up nearly 2% to 610p a share.

The FTSE 100 was over 40 points higher in midmorning trading to 7425 points.

European indices were modestly higher approaching midday, with Spain’s Ibex once again being the best performer in percentage terms. 

North America

The highlight of the day’s economic news is the release of US consumer confidence index for November, which is expected to be slightly lower than October’s reading. Case-Shiller house prices are also due.

In its Global Economic Outlook, the OECD upgraded its forecast for the US economy, which is expected to grow 2.2% this year, rising to 2.5% in 2018 because of the effects of the planned corporate tax cuts.

Federal Reserve chair Jerome Powell nominee testifies before the Senate Banking Committee on Tuesday as part of his confirmation process.

Canada also announces the results of its review of the financial system. 

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
easyJet PLC1,427.00 GBX-0.83-
HSBC Holdings PLC751.00 GBX-0.09
International Consolidated Airlines Group SA626.78 GBX-0.98-
Lloyds Banking Group PLC66.65 GBX0.02
About Author

James Gard  is subeditor for Morningstar.co.uk