Asia
Chinese equities were a rare bright spot among a global equity landscape weighed down by trade fears, sanctions and Turkey’s economic woes. The rest of Asia-Pacific tracked US and global markets lower, with falls on markets in Hong Kong, South Korea, Singapore, Taiwan and Australia.
Japan was one of the weaker markets in the region, as stronger-than-expected economic growth firmed up the Japanese yen. Japan’s GDP grew by nearly 2% on an annualised basis in the second quarter, against a fall of 0.6% in the first quarter.
Europe
The UK’s growth of 0.4% in the second quarter confirmed that the economy had expanded in the spring, and this backed up the Bank of England’s decision to increase interest rates last week. Nevertheless, looking closely at the data, the performance of the economy in June seemed to tail off, which could spell trouble for the third quarter.
Sterling continues to come under serious selling pressure – having started the month above $1.30, the pound is now around $1.27. There was an attempt at a rebound against the euro today but the trend since the start of the summer has been downwards.
Usually this would support the FTSE 100, but today the index is in negative territory, like many indices across the world. Miners were the worst hit, with Russian aluminium and steel firm Evraz (EVR) off nearly 8% despite stronger results yesterday.
In retail news, Mike Ashley’s Sports Direct (SPD) has swooped for House of Fraser’s stores after the department store called in administrators.
Turkey’s currency was in freefall against the dollar and eurozone investors feared that this crisis – ostensibly an emerging markets one – would spread throughout Europe. Banks in the region fell amid anxieties over their exposure to the Turkish economy. Germany’s DAX was the worst performing benchmark in the eurozone in percentage terms.
North America
US markets softened on Thursday and the country’s stock markets are expected to remain under pressure after weakness in Asia and Europe on Friday.
With earnings quietening down after a blizzard of results in recent weeks, the US economy is back in focus today with the release of July inflation numbers. The year on year growth in the Consumer Price Index is expected to be just shy of 3%, the same as in June. Retail sales data is due next week, as well as the University of Michigan sentiment index for August.
