Global Market Report - January 14

Morningstar UK
Updated
Diversification Means Investing Overseas Too

Asia

Chinese and Hong Kong markets started the week negatively after a sharp fall in China exports in December. Exports were forecast to have risen by 2% last month on the same month of 2017, but they fell nearly 4.5%. Imports also fell on the year, and were 7.6% down on 2017, against forecasts for a 4.5% rise. In the absence of any concrete developments from last week’s trade talks, especially an anticipated extension to the truce, investors focused on the damage already done to US-China trade.

Japanese inflation data is due at the end of the week, and the growth in the Consumer Price Index expected to have dropped back from 0.8% in November to 0.3% in December.

Japan’s Nikkei 225 bucked the weaker trend in Asia with a gain of nearly 1% on Friday’s close.

Europe

The FTSE 100 drifted lower today, shedding nearly 50 points to 6,869, having threatened to go back above 7,000 at one point last week. Ahead of the crucial Brexit vote in the Commons tomorrow, sterling remained close to $1.285 against the US dollar – the pound has firmed up since the start of the year. Currently an extension to Article 50 looks the most likely scenario, which could push sterling to $1.30. But all possible outcomes are still in play: including the passage of Theresa May’s deal, a second referendum and even a General Election.

In line with most global markets, Eurozone indices were weaker, with Spain’s IBEX one of the worst performing in percentage terms.

North America

US earnings season kicks off this week with the release of earnings from Citigroup (C) on Monday JP Morgan (JPM) on Tuesday. A flurry of bank releases are also due this week, as well as Netflix (NFLX), whose share price has bounced since the end of December.

Stock futures suggest a softening in US equities at the open on Monday as Wall Street catches up with the latest economic data in Asia and a worsening in sentiment among investors.

In economics, advance retail sales data is due on Wednesday. This is expected to show a drop in growth from 0.2% in November to 0.1% in December on a month-by-month basis.

Canadian inflation numbers are due on Friday.