Global Market Report - May 16, 2018

The FTSE 100 is close to a four-month high but global markets are in a cautious mood as geopolitical risk resurfaces

James Gard 16 May, 2018 | 10:47AM

Asia

With geopolitical risk coming back into focus this week, Asia-Pacific markets inevitably tracked declines on Wall Street on Tuesday.

Progress in Korea now appears to have hit some roadblocks, the Israel-Palestine conflict has reignited and the US-China trade talks may not be running as smoothly as some optimists would like.

Most major indices declined in the region. China’s CSI 300 Index was one of the worst performers on Wednesday, losing nearly 1% on the day after a late slide.

Japan joined in the global declines despite the dollar pushing above 110 yen, a level last seen in February. Figures showing a decline in Japanese economic growth on a quarter on quarter and annualised basis also hurt sentiment. Japan’s GDP was expected to dip 0.1% in the first quarter but actually contracted by 0.6%.

Europe

Eurozone inflation for April was confirmed at 1.2% on an annual basis or 0.3% on a monthly basis. Today the European Central Bank president, chief economist and member of the executive board will speak in Frankfurt to mark the departure of vice president Vitor Constancio. The speech comes amid signs of slackening growth in the eurozone and the resurgence of the dollar against the euro.

Eurozone indices were mixed amid a general drift lower – only the Dax managed to hold on to very minor gains approaching midday.

UK indices shrugged off the generally cautious global mood and were helped by further softening of the pound against the dollar, yen and euro.

Of FTSE 100 companies reporting results, investors in Burberry (BRBY) cheered a rise in profit and plans for a share buyback. The company’s shares were up over 2% this morning in a move towards the recent record high just below £20 in September 2017.

The FTSE 100 is now close to a four-month high and is not far away from its all-time record.

North America

A raft of weekly data on the US economy is released to the market today, including housing starts, industrial production, crude and gasoline inventories.

Companies reporting today include Cisco (CSCO) and Macys (M). Tomorrow sees Walmart (WMT) report.

The Dow broke an eight-day winning streak yesterday and futures suggest the US markets will struggle to make progress at the open today.

 

 

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Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Burberry Group PLC2,004.00 GBX3.73
Cisco Systems Inc43.85 USD1.48
Macy's Inc34.78 USD2.40
Walmart Inc84.17 USD0.63
About Author

James Gard  is subeditor for Morningstar.co.uk