Much stronger than expected Japanese economic growth figures dominated off the global business agenda at the start of the week. An easing in military tension between the US and North Korea helped restore some calm to trading on Monday.
Asia
Japan’s GDP was up 4% on an annualised basis, making it the best performing G7 country in the second quarter, beating forecasts of a 2.5% rise. The rise in domestic business spending was double forecasts at 2.4%. Nevertheless, the strong data did not impress the market too much: the Nikkei 255 closed nearly 1% lower at 19,537, at similar levels to the start of the year.
China’s Shanghai Shenzhen CSI 300 Index responded better to domestic numbers, rising 1.3% to 3,694.68. July retail sales were 10.4% higher than in 2016, and industrial production was 6.4% higher in the same period – although both figures were below analysts’ forecasts. In Australia, scandal-hit Commonwealth Bank (CBA) said its chief executive Ian Narev will step down next year, and the shares rose 1% to AUD 81.31.
Europe
European markets started the week in a more positive mood than last week. By 11am BST, the FTSE 100 was up 38 points at 7,348, helped by a rise in financial stocks such as Standard Chartered (STAN) and Royal Bank of Scotland (RBS).
The £11 billion merger of Standard Life (SL) and Aberdeen Asset Management goes through today, creating a combined with combined assets under management of £670 billion. Standard Life shares initially rose by were down 2% by 11am at 416p.
Eurozone industrial production was the standout economics headline in Europe – June saw a 0.6% fall in output, worse than forecast, and against a 1.2% rise in May. European markets took their cue from the global picture than domestic numbers, with the Euro Stoxx 50, Germany’s Dax and France’s CAC all up 1% by midday CET.
North America
US economic data is light on Monday but the negotiations over the North American Free Trade Agreement will loom large over the global economic agenda. Canada, the US and Mexico begin their talks in Washington at the start of week, negotiations that will likely affect of the future of auto stocks such as Ford (F) and General Motors (GM).
President Trump’s war of words against North Korea are set to provide a backdrop to these fraught trade talks. Markets will be looking ahead to Tuesday’s US retail sales numbers for July, which are expected to have rebounded after a drop of 0.2% in June.
