Global Market Report - October 15

Morningstar UK
Diversification Means Investing Overseas Too

Asia

After a brief respite from the volatility at the end of last week, markets in Asia Pacific resumed their slide on Monday. The Shanghai Composite Index, which suffered a 5% daily fall last week, was off nearly 1.5% on Friday’s close, and ended below 2,600 points, retracing late 2014 levels.

Sentiment still remains fragile after last week’s sell-off, and this latest round of weakness is being fuelled by fears of more tariffs imposed by the US and ongoing tension between the West and Saudi Arabia. Tit-for-tat threats between China and the US have now been replaced by similar warnings from Saudi Arabia and the United States after the disappearance of journalist Jamal Khashoggi.

China GDP is due on Friday.

Japan’s Nikkei was the worst performer in percentage terms, shedding nearly 2% on Friday’s close to 22,271 points.

Europe

Expectations of an imminent Brexit deal emerged over the weekend but these were dashed on Monday morning, leading to a drop in the pound. This sterling weakness have its usual support to FTSE 100 stocks initially, but the global mood got the upper hand in midmorning trading. The FTSE 100 dropped below the key 7,000 points level, while the FTSE 250 was off 1% or 200 points at 18,769 points.

It’s a busy week for UK data releases: unemployment figures are due on Tuesday, followed by September’s inflation data on Tuesday.

Eurozone exchanges showed a similar trend, with indices drifting lower as the morning progressed.

North America

JP Morgan (JPM), which released results on Friday to kick off the latest earnings season, has now become involved in the political row between Saudi Arabia and the United States over the missing Saudi journalist. JP Morgan chief executive is one of a number of US bosses to pull out of an investment conference in Riyadh dubbed the “Davos in the desert”.

Shares in JP Morgan dipped on Friday after results despite some respectable numbers from its third-quarter update.

Earnings updates continue think and fast this week, with a large concentration of big names on Tuesday, including Goldman Sachs (GS) and Netflix (NFLX). Some parts of the tech sector were volatile last quarter so there will be intense scrutiny on the industry’s highest profile companies, most notably Facebook (FB).

In economics, US retail sales are in view today and Canadian inflation numbers are released on Friday.