Global Market Report - January 22
Asia
Chinese markets went into reverse on Tuesday after a recent attempt to recover from December’s slide. A loss of over 1% for the Shanghai Composite Index took it back below 2,600 points, a level it has yet to hold above since last month’s sell-off.
After yesterday’s news that China’s growth has hit a 28-year low, President Xi Jinping has warned of the possible consequences of a slowing economy, including social unrest. A “healthy economy and social stability” are priorities, according to state news.
Hong Kong’s Hang Seng also slipped back, but remained just above 27,000 points.
Japan also drifted lower ahead of the midweek announcement by the Bank of Japan.
Europe
The FTSE 100 looked like it was going to make an attempt at breaching 7,000 points yesterday, but has since dropped back, in line with the fall in European and Asian indices.
The rising pound was another headwind for the index, as sterling moved back above $1.29 – helped by a fall in the unemployment rate to a 44-year low. Behind these ostensibly positive figures, Brexit is tightening the labour market, with EU workers choosing to work elsewhere or leaving the country ahead of the March deadline.
UK public sector borrowing figures were worse than expected for December but this didn’t knock sterling off course.
Germany’s ZEW survey for January added to the storm clouds gathering over the Eurozone’s largest economy. The European Central Bank meets this week.
North America
Trading resumes today after the break for Martin Luther King Jr Day. Early futures suggest a 200 point drop for the Dow at the open on Tuesday as US markets catch up with Asia’s weakness and the downgrading of global economic growth by the International Monetary Fund on Monday.
Dow Jones stalwarts Johnson & Johnson (JNJ), IBM (IBM) report today, while Procter & Gamble (PG) and Ford (F) report tomorrow. Starbucks (SBUX) and Intel (INTC) report on Thursday.
JP Morgan’s (JPM) Jamie Dimon and BlackRock’s (BLK) Laurence Fink are attending the World Economic Forum in Davos, Switzerland.
In this week’s economic releases, weekly jobless claims are due as usual on Thursday as well as manufacturing and services PMI indices.
