Global market report - January 24

World markets made modest gains today after Wall Street's recovery last night, but a stronger pound held back the UK's FTSE 100

James Gard 24 January, 2019 | 7:00PM

North America

US stock futures are currently suggesting a flat open after Wednesday’s gains.

Starbucks (SBUX) and Intel (INTC) report on Thursday. Weekly jobless claims are due as usual on Thursday as well as manufacturing and services PMI indices. Both services and manufacturing PMIs are expected to show the sectors expanding at a healthy rate. US Durable Goods data is expected tomorrow.

Looking ahead to next week, the Federal Reserve meets for the first time this year, but is not expected to raise interest rates.

Europe

The FTSE 100 drifted lower on Thursday, despite gains in European markets and in Asia after Wall Street’s positive close on Wednesday. The pound’s move above $1.30 this week has dragged on equities.

FTSE 100 wealth manager St. James’s Place (STJ) was one of biggest gainers after positive fund flow data.

The European Central Bank makes its interest rate decision today, followed by the press conference with Mario Draghi. While no change is expected to rates, this is the first month without the ECB buying bonds. Draghi is also expected to comment on the growing storm clouds gathering over the Eurozone economy, especially with sentiment weakening in previous powerhouse Germany. Last month he acknowledged that, in central banker speak, risks are “moving to the downside”.

In layman’s terms that means that the media is starting to focus on the possibility of recession.

The IMF has already warned on the global economy slowing down this year and China’s 28-year low for GDP growth has rattled investors this week.

Draghi’s Bank of England counterpart Mark Carney is expected to address Davos today on the global financial system, and is likely to flag up the current risks to the world economy.

Asia

Markets in Asia-Pacific made modest gains on Thursday after Wall Street’s move higher, but Japan missed out with a tiny loss on the day. China and Hong Kong indices crept forward but the moves were unconvincing.

China’s Vice President Wang Qishan addressed the World Economic Forum in Davos yesterday and stressed the interconnection of US and China economies in his pro-trade speech. He argued that, rather than China’s growth story reaching the end of the line, it is moving towards more sustainable growth and will deliver modest prosperity for its citizens by 2020.

But regional investors still have Monday’s headlines of weakening Chinese growth at the forefront of their minds. The 25% fall in Chinese stocks last year shows little sign of being erased this year, despite occasional moves to the upside.

 

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James Gard

James Gard  James Gard is subeditor for Morningstar.co.uk.