Global Market Report - May 9, 2018

World shares shrugged off the Iran news as a rising dollar and firmer oil price helped the FTSE 100's energy stocks

James Gard 9 May, 2018 | 10:56AM

Asia

Markets in the region were mixed as the dollar and oil gained after President Trump withdrew from the Iran nuclear deal. US stock markets closed largely unchanged as traders adopted a wait-and-see approach to the developing geopolitical picture. Asia followed suit so China’s Shanghai Composite Index closed almost unchanged on the day, while Japan’s Nikkei was off by less than 0.5% despite a fall in the yen that usually supports domestic equities.

Europe

Oil and commodity stocks were the best performers on the FTSE 100 this morning as global events dominated trading. A rise in the dollar against the pound, which threatened to push sterling below 1.35 for the first time since the end of 2017, also helped boost the blue-chip index. The FTSE 100 moved through 7,600 points, its highest since the start of the year, and within the range seen before the global market selloff in late January and early February.

At the bottom of the leaderboard, high-end fashion firm Burberry (BRBY) was lower after Belgian billionaire Albert Frere sold his 6% stake in the company. Frere’s Groupe Bruxelles Lambert had disclosed the stake to the market in February 2017, increased it in November, and has now sold the entire stake – the largest holding in Burberry without board representation.

Shares in contract catering group Compass (CPG) were lower after first-half profits fell despite a rise in revenue.

In the eurozone, Germany’s Dax was the best performing main market but its gains were limited. Italian shares and bonds were under pressure amid fears of yet more political upheaval in the country.

North America

Weekly crude oil inventories will be in view today amid a rise in the price of oil to four-year highs after the US pulled out a deal with Iran, which fuelled fears of further instability in the Middle East.

The US Treasury is also selling $25 billion in 10-year bonds today at a time when yields have nudged back above 3% on fears over political instability. JPMorgan boss Jamie Dimon said he expects the 10-year yield to be above 4% this year.

US stock market reaction to the Iran news was muted but futures suggest a gain today as oil stocks react across the world.

A wide range of US companies are reporting today, including Eastman Kodak (KODK), the photographic company with a long heritage that emerged from bankruptcy five years ago. With many parts of the legacy business sold to tech giants, the company has diversified – it now sells a smartphone in the US market and also plans to launch a cryptocurrency for photographers, KodakCoin.

Under-fire Tesla (TSLA) founder Elon Musk has attempted to deflect some of the criticism brought upon him by a now infamous earnings call by buying nearly $10 million of the company stock. Morningstar analysts argue that the company’s fair value is difficult to pin down given the speculative nature of its ventures, but that it should see profits and cash flow bounce back this year.

 

 

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Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Burberry Group PLC1,671.50 GBX-2.76
Compass Group PLC1,493.50 GBX-1.42
Eastman Kodak Co2.50 USD-1.19-
Tesla Inc260.04 USD-1.47
About Author

James Gard  is subeditor for Morningstar.co.uk