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Global Market Report - January 16 2018

US markets are expected to make a strong start to the trading week after Monday's holiday, and the Dow Jones could hit 26,000 points

James Gard 16 January, 2018 | 10:54AM

Asia

Markets in the Asia-Pacific region rose on Tuesday morning, even without an overnight push from record high levels on Wall Street. With a weaker yen boosting Japanese exporters this week, the country’s Nikkei index pushed towards 24,000 points, a level last seen in 1991. The Nikkei was the best performing index in the region, gaining 1% on the day, with China’s CSI 300 and South Korea’s Kospi not far behind. 

Europe

The fallout from the collapse of UK construction firm Carillion continues to dominate the news headlines and have an effect on listed companies in the same sector. Ordinarily, the collapse of a rival would give an immediate uplift to firms like Galliford Try (GFRD) and Balfour Beatty (BBY), but they both have told the market that they will take a hit from joint ventures with Carillion. The collapse of Carillion also casts a shadow over the once booming listed outsourcing sector.

In UK economics, inflation figures are the highlight of the week’s releases. As predicted, CPI inflation dipped to 3%, from 3.1% in November as rises in food prices eased. Still the figure remains 1% above the Bank of England’s target. The Bank is expecting inflation to ease into 2018 as the effects of the pound’s slide after the Brexit vote recedes. The retail price index, a broader measure of inflation that is often used to benchmark pay deals, was higher than expected at 4.1%.

Rio Tinto (RIO), which is listed in London and Australia, revealed in a fourth-quarter production update that iron ore shipments, an indicator of the strength of Chinese demand, were up in the last quarter. Aluminium and copper production were down in 2017 year on year, however. The company’s shares slipped over 1% on Tuesday morning and had a knock-on effect on listed mining firms.

European exchanges were given an immediate boost by the euro easing against the dollar after its recent strong run – markets in Germany, France, Italy and Spain were up by less than 1% on the day.

North America

Stock markets in the US re-open after the Martin Luther King holiday. Bank earnings season picks up where it left off, with Citigroup (C) reporting results today before the market open. Goldman Sachs (GS) and Bank of America (BAC) report on Wednesday. Investors will be keen to see the impact that recent tax changes – which ultimately will benefit big US corporations – has had on companies’ accounts in the fourth quarter.

Dow futures are forecasting a 200-point jump in the index at the open on Tuesday, putting the 26,000 points level within reach, not long after breaking through 25,000.

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
Balfour Beatty PLC229.60 GBX0.61
Bank of America Corporation29.82 USD-0.60
Carillion PLC14.20 GBX-28.95
Citigroup Inc69.73 USD-0.51
Galliford Try PLC681.97 GBX2.09
Goldman Sachs Group Inc215.23 USD-0.85
Rio Tinto PLC4,252.00 GBX0.06

About Author

James Gard  is content editor for Morningstar.co.uk

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