Global Market Report - July 11

New US tariffs on China sent global markets into reverse on Wednesday

James Gard 11 July, 2018 | 11:07AM

Global Market Report

Asia

After a bright start to the week, markets in the Asia-Pacific region once again lost their nerve as new trade tariffs were proposed by the United States and China threatened reprisals.

The Shanghai Composite, which had risen by around 2.5% on Monday, lost nearly 2% today and closed at 2,777 points, having stood at nearly 3,600 points at the end of January this year.

Japanese equities also fell, resisting the usual stimulus from a weaker yen against the dollar.

Europe

UK equities tracked the global trend, with the FTSE 100 losing 100 points or 1.3% to 7,590. Miners were among the biggest fallers today.

With the UK’s government ruling on the takeover of Sky (SKY) expected imminently, 21st Century Fox (FOXA) today attempted to get ahead of rival Comcast (CMCSA) by offering £14 a share, against Comcast’s £12.50. Sky’s shares fell 1% on Wednesday to £14.85 after the news broke, having been above £15 in recent weeks. Morningstar analysts rate the company as two stars, which means that it is overvalued – their fair value estimate for Sky shares is £12.40.

Burberry (BRBY) shares slipped despite a relatively neutral quarterly update from the fashion firm. Sales in Asia-Pacific and the US were a bright spot, but spending by tourists in the UK and Europe was less impressive.

Eurozone markets were also weaker, with Germany’s Dax, often the target for sellers when world markets are volatile, among the biggest falling exchanges in percentage terms.

North America

Dow futures are predicting a sharp fall at the open on Wednesday as US markets catch up with the shift in sentiment in Asia and Europe.

Canada is expected to put up interest rates by a quarter point today to 1.5%.

On Thursday, US inflation figures are expected to show a 0.2% rise in CPI month on month and 2.9% year on year. On Friday, the University of Michigan Sentiment Index will be released for July, although this is a provisional figure.

 

 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Burberry Group PLC1,740.00 GBX-1.89
Comcast Corp Class A38.00 USD-0.89
Sky PLC  -
Twenty-First Century Fox Inc Class A48.07 USD-0.19

About Author

James Gard  is subeditor for Morningstar.co.uk