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Global Market Report - January 12 2018

Global investors are awaiting the start of US earning season, while a bid for FTSE 100 engineer GKN drove its shares up 25%

James Gard 12 January, 2018 | 11:06AM

Asia

As in previous days, the performance of Japanese markets diverged from their Chinese counterparts: Japan’s Nikkei and Topix closed down on the day, but China’s CSI 300 was up around 0.5% at 4,225 points as consumer and financial shares listed in Shanghai were higher. Another higher close on Wall Street provided the backdrop to a positive showing from the region’s markets, but a stronger yen and mixed Chinese data held back gains. Nevertheless, Uniqlo-owner Fast Retailing (9983) was up 6% in Tokyo after record results. China exports rose by 10% in December, but this was down over 12% in November.

Hong Kong’s Hang Seng was the best performing market in the region, rising nearly 1%, and is up around 5% so far this year. 

Europe

A light company news roster on Friday in the UK was livened up by news of an unsolicited takeover bid for FTSE 100 engineer GKN (GKN). The bid, from company turnaround specialist Melrose, valued the company at £7 billion, a 20% premium over GKN’s closing share price on Thursday. Accordingly, GKN’s shares rose over 20% in Friday morning trading, leading the FTSE 100, which was flirting with new record high levels.

Shares in FTSE 250 housebuilder Bovis (BVS) were over 3% higher as it raised its dividend and provided an upbeat forecast for 2018. Bovis has been one of the laggards of the boom in housebuilding shares and was the subject of an ultimately fruitless takeover battle in 2017. But chief executive Greg Fitzgerald said today: “There has been a step-change in the quality of our homes delivered on completion and I'm pleased to see this reflected in our level of customer satisfaction.” Shares in listed housebuilders have struggled in recent weeks despite positive updates on the number of completions and prices sold. Bovis homes sold for more than 7% than they did in 2016, and this rises to 9% for private sector houses sold in 2017.

The euro has already made a strong start against major currencies this year, following on from a strong 2017. News of progress in Germany’s political stalemate gave the single currency a further push above $1.20 against the dollar, the highest level since late 2014. Usually a stronger euro leads to weakness in European shares, but the region’s leading exchanges were just in positive territory approaching midday. 

North America

The economic and corporate calendar lights up at the end of an uneventful weak in US markets: investment bank JPMorgan Chase (JPM) kicks off fourth-quarter earnings season. Wells Fargo (WFC) also reports.

US retail sales and inflation figures are also in focus. CPI inflation is expected to come in at 2.1% for December, a slight fall from November’s figure.

Stock market futures suggest a strong start to the last day’s trading of the week on further dollar weakness. The New York Stock Exchange is closed on Monday for a public holiday, and the earnings season resumes on Tuesday with more bank reports. 

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
Bovis Homes Group PLC1,136.00 GBX-0.66-
Fast Retailing Co Ltd50,690.00 JPY0.62
GKN PLC447.60 GBX1.27
JPMorgan Chase & Co112.99 USD0.64
Wells Fargo & Co63.88 USD2.21
About Author

James Gard  is subeditor for Morningstar.co.uk