Global Equity Markets in Review
• Early week relief rally propels key US benchmarks to new highs
• Positive economic data lifts European markets (except UK)
• Asian markets finish mixed despite North Korea’s aggression
S&P 500, Dow Industrials ends the week at all-time highs
Wall Street kick-started the week on a solid footing as stocks rebounded after Hurricane Irma appeared to have caused less-than-anticipated damage. Insurance and travel-related stocks recovered from their last week’s dismal performance. Moreover, banking and telecom stocks helped benchmark indices move higher. The stock market rally took a breather after the data revealed that the consumer price index increased 0.4% m/m in August, marginally above market expectations. The stock market remained firm despite another missile test by North Korea.
In stock-specific news, shares of consumer credit reporting company Equifax slumped over 30% after a massive data breach. The healthy upswing in blue-chip shares of Boeing, Apple and 3M pushed Dow Jones Industrial Average (DJIA) to new highs. The DJIA gained 2.2% to close at 22,268.34, logging its fourth straight record close. The S&P 500 and NASDAQ recorded weekly gains of 1.6% and 1.4%, respectively.
Most European markets (except UK) close higher
European markets rallied at the start of the week amid receding geopolitical concerns and less-than-expected damage caused by Hurricane Irma. Moreover, largely favorable economic data propelled benchmark indices higher. Eurozone wages rose at its fastest (2% y/y) pace in more than two years during 2Q17. Investor confidence received a further boost after S&P raised Portugal’s credit rating to investment grade, reflecting the progress made by the struggling economy. The pan-European Stoxx 600 gained 1.9% during the week. Germany’s DAX added 1.7%, and France’s CAC gained 2.0%.
The UK’s FTSE 100 dropped 2.2% during the week. Unrelenting upward momentum in the sterling weighed on UK stocks. The sterling climbed to its highest level after Brexit on Friday. Moreover, the Bank of England’s signal that interest rates could be hiked soon, weighed on investor sentiments. The British central bank kept the rate and its quantitative easing programme unchanged in its latest monetary policy meeting. However, it warned that the interest rates could be hiked faster than what market participants are anticipating at present. Furthermore, a spike in inflation pressured the UK equity market, as an increase in petrol and clothing prices pushed inflation higher to 2.9% y/y in August, its highest level in over five years.
Asian markets close mixed; Japan, India, Australia advance while China struggles
Japan’s Nikkei 225 advanced 3.3% during the week. A weakness in the yen lifted Japanese exporters while rising yields in the US supported financial sector stocks. Moreover, healthy economic data aided the capital markets. Core machinery orders jumped 8% in July after a 1.9% fall in June. Geopolitical concerns resurfaced as North Korea launched another missile over Japan. However, stock market reaction remained largely muted this time.
China’s stock market ended the week in the red as stocks were under selling pressure amid a slew of soft economic data releases. Fixed asset investments grew 7.8% y/y during January–August, the weakest pace in almost two decades. Furthermore, China’s factory output and retail sales data were softer-than-expected. The Shanghai Composite Index lost 0.3% over the week.
Australia’s S&P ASX posted weekly gains of 0.4%, despite a 0.8% decline on the final trading day of the week. A Strong performance by banking sector stocks aided the benchmark ASX index. Information technology and financial sector stocks were among the biggest gainers of the week. Australian stock market retreated on Friday following North Korea’s latest provocation.
India's Nifty and Sensex clocked weekly gains of 1.5% and 1.9%, respectively. Rally in pharmaceutical and capital goods sector stocks lifted the Indian benchmark indices during the week.
Global Equity Market performance