Asia
Trade wars remained very much to the forefront of Asia-Pacific investors’ minds, not least because of weekend comments by President Trump that the United States is “winning” the current battle over trade.
The Shanghai Composite Index dropped over 1%, continuing last week’s slide, and is now nearly 25% lower than at the start of the year.
Morningstar analysts have recently looked at how resilient the Chinese economy would be in the event of a full-blown trade war and forecast that “a trade war could send China's economic growth into the low-single digits – likely a politically unpalatable option in a country accustomed to much higher levels.”
Chinese inflation data is due on Friday, and it is expected to show a slight rise in the cost of living to 2% year on year, based on the Consumer Price Index.
Hong Kong’s Hang Seng went against the regional trend, closing higher amid signs of stability in global tech stocks after a rout at the end of July.
Japanese equities were slightly weaker as the yen firmed up against the dollar.
Europe
With the UK media in recent days obsessing over the prospect of a “no deal” Brexit – from the Bank of England Governor and the International Trade Secretary – has weakened the pound. But today the FTSE 100 was still adrift in morning trading as it tracked the global mood. European exchanges were marginally lower.
Economic news from the eurozone was not encouraging for equity investors – German factory orders fell 4% month on month.
HBSC (HSBA) shares were softer as the bank reported interim results. Profits and revenue were higher year on year but the dividend was held at 10 cents, unchanged from the previous six months and the same period last year.
North America
Friday’s disappointing job numbers have raised the chances of the Federal Reserve holding rates at its next meeting in September and possibly refraining from four rate increases this year.
This Friday’s inflation data should add some more nuance to the market’s guesswork on the Fed’s next move. Consumer prices are expected to have risen by 2.9% in July, the same as in June.
While last week saw the world’s first trillion dollar company, this week moves down the market cap scale to companies like Walt Disney (DIS) and Marriott (MAR).
