Markets Update - August 2015
Market Roundup: Shanghai tightens market controls
Source: Mithril Asset Management
Shanghai was back on the rise after officials announced fresh steps to rein in short selling. Late Monday, the Shanghai and Shenzhen stock exchanges announced revised rules on short selling to curb volatility, according to statements published on their official websites.
The Nikkei also edged up on the week as the BoJ stuck to its bullish view that it can hit 2% inflation without further intervention.
In the UK the FTSE100 was also looking at a week in the green, even if the markets closed lower in anticipation of US jobs data. Even the much heralded ‘super Thursday’ didn’t create much local furor as the Bank broke with tradition to publish the MPC’s August rates decision, the minutes of the meeting, and its quarterly inflation report, alongside Bank governor Mark Carney’s regular press conference.
Rates were kept on hold with a vote of 8-‐1 indicating a 2016 hike at the earliest.
U.S. stock futures edged lower Friday, after the jobs report came in mostly in line with the market's expectations raising the likelihood for a rate hike.
The nonfarm payrolls report showed that the U.S. gained 215,000 jobs in July, matching industry estimates, and the unemployment rate stayed pat at 5.3%, putting the Federal Reserve in line to raise interest rates for the first time since 2006.
Markets Update - June 2015
GLOBAL EQUITY MARKETS RISE 1% IN MAY, JAPAN STAR PERFORMER
Source: JP Morgan Asset Management
World stock markets shrugged off weak first-quarter US economic data, volatility in global bond yields and investor uncertainty over the outlook for growth, to post further gains in May. In local currency terms, the MSCI World Index finished the month up 1.3%. Among major markets, the star performer was Japan, up 5.1%, boosted by strong economic and corporate earnings growth in the first quarter. Meanwhile, US equities performed in line with the MSCI World Index, boosted by better-than-anticipated first-quarter earnings results. In Europe, performance was mixed. Italy again outperformed (up 3.2%), while the UK (up 0.6%) and France (up 0.2%) were modestly positive. Conversely, Spain (down 1.2%) and Germany (down 0.7%) lagged. For emerging markets, it was a negative month after a strong start to the year. The MSCI Emerging Markets Index fell 2.5%. The weakest markets were South Africa, the United Arab Emirates, Brazil, Russia and Qatar, which all fell by over 4%. India and Indonesia were notable exceptions, rising by 3.4% and 4.8% respectively.
Markets Update - December 2014
Global equities deliver healthy returns in 2014
Source: JP Morgan Asset Management
December was a month of profit taking for global stock markets, following a strong fourth-quarter rally. In local currency terms, the MSCI World Index fell 0.8% in December and rose a healthy 9.8% for 2014 as a whole. The star performer was the US, where equities were flat in December but soared 12.7% in 2014. In Europe, political uncertainty over the looming Greek elections and subsequent government policy, together with continuing anxiety over eurozone deflationary pressures, caused the MSCI Europe Index to fall 2.1% in December. Sweden (up 0.6%), Belgium (flat) and the Netherlands (down 0.5%) proved better safe havens than either Germany (down 1.5%) or the UK (down 2.3%). The pain was predictably greatest in the periphery, with Portugal, Italy and Spain all falling by at least 4%.
The impact of the strong US dollar remained significant for all international markets. This was most visible in Japan, where in local currency terms returns were close to zero in December and up 9.5% for 2014. However, due to the weaker Japanese yen, Japanese equity returns in US dollars were much less attractive, down 1.4% for the month and down 4.0% for the year. This currency effect was also significant for emerging markets, with returns for 2014 up 5.2% in local currency terms but down 2.2% in US dollar terms. In local currency terms, the best performing emerging markets were Egypt, Turkey, Indonesia, the Philippines and India, which all rose by over 26%. Conversely, the worst performers were Greece (down 32%), Russia (down 13%) and Hungary (down 13%).
Markets Update - September 2014
Are things looking up in Europe?
Source: JP Morgan Asset Management
The outlook for European stock markets is looking positive, with share prices supported by hopes that significant policy action from the European Central Bank (ECB) will help to boost economic growth and corporate profits across the continent.
ECB action to boost growth
With eurozone economic growth disappointing and inflation falling to worryingly low levels, the ECB has finally taken action. In June, the ECB announced plans to boost bank lending by providing Europe’s commercial banks with access to billions of euros of cheap long-term funding, and by making it less attractive for the banks to keep money invested with the central bank. This was followed in September by the announcement of a further cut in eurozone interest rates to new record lows, as well as measures to buy loans from banks to try to further boost the flow of credit to the economy.
Markets Update - June 2014
Signs of an improving global economy?
China - China's service sector grew at its fastest pace in six months in May, helping allay fears of a sharp slowdown in its economy. The non-manufacturing Purchasing Managers' Index (PMI) rose to 55.5 in May from 54.8 in April. The PMI is a key indicator of the health of the sector and a reading above 50 indicates expansion. It comes just days after China reported that the manufacturing sector grew at its fastest pace this year in May. China's service sector, which includes construction and aviation, accounts for nearly 43% of its overall economy.
Spain - Spain is set to introduce a new stimulus package totalling €3.6bn ($4.9bn) in a bid to bolster the country’s nascent economic recovery. Spanish prime minister Mariano Rajoy has announced that the new measures will be brought in next week in an attempt to create jobs and encourage the competitiveness in the economy.“ Next Friday, the government will present a package of measures to increase competitiveness and productivity,” he said.