GLOBAL MARKETS UPDATE - MONDAY 17 JULY 2017

Posted on 17 Jul 2017

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Global stockmarkets gained as weaker-than-expected US economic data and comments from Fed chair Janet Yellen raised hopes that US policy normalisation would be gradual.

Global Markets Update - 17-07-17

United Kingdom

The FTSE 100 rose 0.4% over the week.

Average weekly earnings grew 1.8% on a year-on-year basis in the three months to May. Inflation is now 2.9%.

Consumer spending fell 0.3% in the second quarter according to Visa. This was the steepest fall in four years.

Shares of AstraZeneca (AZ) dropped amid reports its CEO was about to join Teva Pharmaceutical, ahead of a crucial clinical test for AZ.

US

The S&P 500 rose 1.3% over the week, closing at a fresh record high. Tech stocks rebounded, with the Nasdaq recording its best week this year.

In her semi-annual testimony to Congress, Federal Reserve chair Janet Yellen said that interest rates would not have to rise by much to get a neutral policy stance. She also appeared less confident that the recent easing in inflation would be temporary. Markets moved to price in only a 50% chance of a further rate rise in 2017 following her comments.

The US consumer price index rose an annualised 1.6% in June, down from 1.9% in May. Core consumer prices held steady at 1.7%.

US retail sales unexpectedly fell 0.2% in June. “Core” retail sales, which exclude cars, building materials, gas and food, also fell 0.2% and have now declined for two months running for the first time since early 2015.

The University of Michigan’s consumer confidence survey declined to 93.1 in July, down from 95.1 in June.

The Bank of Canada raised interest rates by 25bps to 0.75%, its first rate rise since 2010, citing rapid job growth and buoyant property prices.

JP Morgan Chase reported a 13% rise in second quarter profits to $7bn, lifted by strong growth of loans and deposits, but trading revenues fell. Elsewhere, profits at Wells Fargo increased 5% to $5.8bn, but revenue was flat. In contrast, Citigroup reported a 3% fall in profits to $3.9bn, while trading revenues also fell. The bank also made greater provision for bad loans.

Europe

The FTSE Eurofirst 300 rallied 1.7% over the week.

Japan

The Nikkei 225 gained 1.0% over the week.

Machinery orders fell 3.6% in May, their sharpest decline in nine months.

Pacific Basin

Singapore’s second-quarter GDP grew by a lower-than-expected 2.5% due mainly to slowing manufacturing activity.

Emerging Markets

India’s wholesale price index rose 0.9% year-on-year in June, the slowest pace of price gains since July 2016.