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Global Market Report - January 17 2018

Hong Kong's Hang Seng hit a record high on Wednesday but global equity markets were mixed ahead of latest reports from Goldman Sachs and Bank of America

James Gard 17 January, 2018 | 11:05AM

Asia

A mixed close on Wall Street set the tone for an uneven performance from Asia-Pacific equities on Wednesday. A drop in the Japanese yen failed to translate into buying momentum for the country’s equities: the equal-weighted Nikkei and the market capitalisation-weighted Topix indices both dropped back on Tuesday's levels.

Japan’s equity markets have made a strong start to the year, continuing 2017’s optimism, but the recent rally paused today amid a global retreat for equity markets. Hong Kong’s Hang Seng was the rare exception, hitting a new record high. Chinese investors taking advantage of lower valuations than in Shanghai and Shenzhen are believed to behind the recent gains, as well as Hong Kong catching up with the stellar performance of US markets in 2017. China’s 2017 GDP figures will be released on Thursday morning.

Europe

Markets in Europe caught the global mood of caution, with most equity indices in the red approaching midday. Eurozone inflation figures came in as expected – the cost of living as measured by the Consumer Price Index (CPI) was 1.4% higher in December than the same month in 2016, although this was lower than the previous month. The euro itself made little reaction to the data release.

In the UK, the fallout from the collapse of construction and outsourcing giant Carillion continues. Stock market investors are looking for similar companies that could also run into trouble: today the focus was on Interserve (IRV), whose shares plunged 15% at the open before recovering. Carillion rivals Balfour Beatty (BBY) and Serco (SRP) were also lower.

Shares in fashion retailer Burberry (BRBY) were sold off after its latest quarterly update to the market, which revealed that UK sales had fallen while Chinese shoppers continue to buy the firm’s goods.

On the FTSE 100, the biggest faller was publisher Informa (INF) as it revealed to the market that it is planning to buy events firm (UBM).

North America

The bank reporting season continues with releases from Goldman Sachs (GS) and Bank of America (BAC) both publishing numbers before the market opens: Goldman is forecast to have made earnings per share (EPS) of $4.90, while Bank of America is expected to reveal EPS of 44 cents. Citigroup’s earnings beat estimates on Tuesday but the bank still absorbed a one-off tax charge of nearly $20 billion after changes to US tax policy.

In Canada, the central bank is expected to raise interest rates from 1% to 1.25% as the country’s economic growth continues. 

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 PLC216.60 GBX0.19
Bank of America Corporation33.18 USD1.04
Burberry Group PLC2,033.00 GBX0.10
Goldman Sachs Group Inc220.28 USD0.94
Informa PLC786.80 GBX1.86
Serco Group PLC154.60 GBX1.38

About Author

James Gard  is content editor for Morningstar.co.uk

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