GLOBAL MARKETS UPDATE - MONDAY 14 AUGUST 2017

Posted on 14 Aug 2017

Global stockmarkets retreated as investors were spooked by rising tensions between the US and North Korea. In contrast, core sovereign bonds and gold benefitted from their safe haven status, as did the yen and the Swiss franc.

United Kingdom

The FTSE 100 lost 2.7% over the week, losing at a three-month low.

The National Institute of Economic and Social Research said the UK economy grew by 0.2% in the three months to July, after 0.3% growth in the second quarter, as consumer spending is slowed by weak wage growth and Brexit-related uncertainty.

Prudential said it was to merge its asset management business, M&G Investments, with its UK life insurance business in a move that many considered to be a prelude to breaking up its business.

US

The S&P 500 fell 1.3% over the week.

Consumer prices rose 0.1% in July, taking the year-on-year increase to 1.7%, up from 1.6% in June. Core CPI also rose 0.1%, holding steady at a year-on-year gain of 1.7%.

Europe

The FTSE Eurofirst 300 slipped 2.8% over the week.

Altice was said to be considering a bid of $185bn for Charter Communications. The deal will add to Altice’s $23bn of debt following its previous acquisitions.

Japan

The Nikkei 225 slid 1.1% over the week.

SoftBank invested $2.5bn in Indian online retailer Flipkart.

Pacific Basin

China’s consumer prices rose 1.4% year-on-year in July, down slightly from June’s level of 1.5%.

Chinese exports rose 11.2% year on year in July, down from the 17.3% growth seen in June. Imports grew 14.7% in July compared to the same month a year ago, slowing markedly from a rise of 23.1% in June.

Emerging Markets

Russia’s GDP expanded by 2.5% on a year-on-year basis over the second quarter.

Bonds

The yield on the 10-year Treasury bond closed the week at 2.21%, having touched a mid-week low of 2.18%. Meanwhile, the yield on the 10-year German Bund closed the week at 0.38%.

Tesla increased its junk bond sale from $1.5bn to $1.8bn in response to strong investor demand.

British American Tobacco followed a $17.25bn fund raising early in the week with a further €3.1bn and £450m bond issues towards the latter part of the week. The proceeds will be used to fund its purchase of Reynolds American.

Commodities

Gold rallied to $1,286 an ounce amid rising geo-political tensions. Copper also reached a two-year high on hopes of strong Chinese demand.

Oil prices hit an 11-week high as Opec raised its forecasts for global oil demand for 2017 and 2018 and lowered its estimates of non-Opec oil production.