Global Market Report - October 19 2017

Chinese stock markets dropped as GDP growth was less than expected, while the Catalonia crisis weighed on European equity markets

James Gard 19 October, 2017 | 12:14PM
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Asia

Chinese economic growth figures for the third quarter were the week’s economics highlight in the region. GDP grew by 6.8% on an annualised basis, lower than the 6.9% recorded in the second quarter. Equity investors expressed disappointment that the number was not higher, particularly as China’s central bank chief Zhou Xiaochuan had predicted a strong second half of the year for the world’s second largest economy.

Equity markets also failed to register too much reaction to China’s President Xi Jinping’s speech to the country’s party congress, in which he spoke of a new era of economic growth for China and promised more opportunities for foreign investment.

The CSI 300, which replicates the performance of the Shenzhen and Shanghai stock exchanges, drifted 12 points lower to close at 3931.25. Hong Kong’s Hang Seng index fell nearly 2% to 28,201.76 – this week’s move lower for the index has started to erase some of the gains at the beginning of the month, where the Hang Seng hit highs last seen since the financial crisis.

Japan was again on a different track to Chinese equities, with the Nikkei closing higher at a new 20-year high ahead of Sunday's election. The Topix index was also up on the day. 

Europe

The Catalonia crisis in Spain escalated on Thursday as the central government announced that it would begin the process of taking direct control of the region. Spain’s Ibex index fell 1% to 10,184.9, a drop of 1,000 points since early summer. The country’s 10-year bond yield also increased.

Continental exchanges were lower as investors mulled the implications of Spain’s political problems.

In the UK the FTSE 100 dipped slightly but still remained above the 7,500 level. UK retail sales figures for September showed a contraction of 0.8%, against forecasts for a drop of 0.1%, and after a strong performance in August. The pound dropped against the euro after the figures were released. Sterling will be in focus as the UK prime minister heads to Brussels to meet EU leaders to discuss trade terms after Brexit. In the FTSE 100, consumer goods firm Unilever (ULVR) was the biggest faller in the FTSE 100 as it said bad weather had hit sales growth in the third quarter. 

North America

Credit card firm American Express (AXP) reported earnings after the market close last night, beating expectations with earnings per share of $1.50. The company also announced that its chief executive, Kenneth Chenault, will be stepping down after 16 years. Thursday sees a whole range of companies reporting earnings, including Verizon Communications (VZ), Bank of Ney York Mellon (BK), Blackstone Group (BX), Paypal (PYPL) and Philip Morris (PM). The Dow Jones Industrial Average closed above 23,000 for the first time after an 8% rise in IBM (IBM) stocks to $159.52 per share.

In economics, weekly jobless claims will be released.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
American Express Co298.65 USD1.90Rating
Bank of New York Mellon Corp77.62 USD1.58Rating
Blackstone Inc170.84 USD1.14Rating
PayPal Holdings Inc87.13 USD0.40Rating
Philip Morris International Inc124.22 USD1.68Rating
Unilever PLC4,556.00 GBX-0.07Rating
Verizon Communications Inc39.93 USD-0.10Rating

About Author

James Gard

James Gard  is senior editor for Morningstar.co.uk

 

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