Global Market Report - August 20

World stock markets rose on Monday amid growing optimisim about US-China trade talks, while Greece exited its bailout programme

James Gard 20 August, 2018 | 11:06AM
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Global Market Report

Asia

The return to the negotiating table of the United States and China has helped calm investors’ nerves at the start of the week. Hong Kong’s Hang Seng was the best performing market in percentage terms on Monday, while the under-fire Shanghai Composite Index managed a rise of over 1%.

Japan’s Nikkei bucked the wider global trend with a slight dip from Friday’s closing level.

Europe

The FTSE 100 nudged above 7,600 points this morning, helped by gains from miners, which rebounded after a difficult week. One of those risers today is BHP Billiton (BLT), which reports fits-half results on Tuesday.

Memories of the Eurozone crisis are fading in today’s more benign economic conditions, but Greece’s exit from the international bailout programme is worth noting. Under the European Stability Mechanism, Greece received €86 billion in aid from the EU and IMF in 2015 as part of the third and final bailout. A year ago Greek 10-year bond yields were approaching 6%, compared with 4.26% now, while Italy’s have gone in the opposite direction, gaining 100 basis points to move above 3%. Investors are now focused on Turkey’s economic problems and currency collapse, with talk of an IMF bailout increasing.

At the start of the new trading week, European equities perked up following last week’s volatility. The strong momentum from Asian markets helped set the global tone for the new trading week.

North America

This week sees the release of the Federal Reserve minutes from the latest meeting in August, where the Fed held interest rates. This Friday Fed chair Jerome Powell speaks at the Jackson Hole symposium and he is expected to tee up the next monetary moves from the US central bank. Interest rates are expected to rise in September, making it the third quarter point rate hike this year, leaving meetings in November and December to complete the fourth rise.

In the corporate world, Medtronic (MDT) releases figures on Tuesday, retailer Target (TGT) on Wednesday. Chinese tech giant Alibaba (BABA), one of the so-called “BATs” stocks and listed in New York, reports on Thursday. Recently we have written about the problems of Tencent (00700), whose share price has grown spectacularly in recent years but gone into reverse this year.

Canadian banks, including Royal Bank of Canada (RY), report earnings this week.

Tesla (TSLA) will remain in focus this week after a sharp fall in the share price on Friday, and further falls in pre-market trading today.

 

 

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James Gard  is content editor for Morningstar.co.uk