GLOBAL STOCK MARKETS START THE NEW YEAR WITH A BANG

Global shares powered ahead during the first trading week of 2018, building on December’s gains. Japanese stocks touched multi-decade highs, while technology and energy stocks pushed US stock market indices further into record-breaking territory. Eurozone economic activity, accelerating at its fastest pace for seven years, led European company shares higher. Commodity prices also rose. Oil gushed higher, while the price of gold rallied. With investors firmly focused on accelerating global growth prospects, bonds were somewhat sidelined. Global bond prices fell and yields rose (prices move inversely to yields) as investors focused on the aforementioned riskier assets.

TOASTING THE NEW YEAR

The thrill of bubbles, at a lower cost, has led to record amounts of prosecco being consumed, and while Champagne growth rates in Japan and Australia remain strong, the three biggest drinkers – France, the UK and the US – are relatively flat, according to the International Wines and Spirits Record. Prosecco in markets such as the UK really started to surge in popularity after the financial crisis, and clever marketing helped sales pass those of Champagne in 2013. That has led some to believe more of the French producers will focus future production on the premium end of the market.

IRAN TENSIONS PROVE FILLIP FOR OIL

Iranians have taken to the streets across the country in protest against economic hardship and perceived political repression, in the biggest demonstrations for almost a decade. The price of Brent crude oil climbed to the highest level in more than two and a half years as the second largest economy in the Middle East, which ranks as OPEC’s thirdbiggest crude producer, faced supply interruptions. Elsewhere, natural gas was also on the march, as a cold snap across the east coast of the US lifted prices to their highest in more than a month.

COMPUTER BUGS: YOU’VE HAD YOUR CHIPS

Shares in Intel weakened after a security bug was found in its chips, used in millions of computers worldwide. The flaw, known as Meltdown, could potentially be exploited by hackers to steal data. Shares in Advanced Micro Devices initially surged on the bad news for its rival, but retreated somewhat after it emerged that a similar flaw, known as Spectre, was affecting its chips as well as Intel’s and those of Arm holdings. Microsoft, whose shares were little changed, rushed out an emergency Windows update that was designed to fix the problems.

THE MARCH OF THE MAKERS

From Kentucky to Coventry, Beijing to Berlin, it seems factory floors are buzzing with the sounds of increased output and higher export orders. Global manufacturing surveys, published last week, and covering the month of December 2017, saw production firing on all cylinders – in China, India, Japan, the US and Europe. The forward-looking surveys are regarded as important by investors as they typically question businesses on indicators such as new orders and employment growth, and are viewed as useful backup for the sustainability of global economic growth. For manufacturers at least – so far, so good.

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