Global Markets Update Monday, 19 February 2018

Posted on 19 Feb 2018

Global stockmarkets rebounded over the week, shrugging off higher-than-expected US inflation data.

Global Market Update - 19-02-19


United Kingdom

The FTSE 100 rose 3.2% over the week.

UK retail sales rose 0.1% in January, taking their annual increase to 1.6%. The data indicate that UK retailers are facing the toughest start to a year since 2013.

UK inflation held steady at 3.0% in January, higher than estimates of a dip to 2.9%, amid signs of higher wage pressures.


The S&P 500 rallied 4.4% over the week, its best weekly performance since the first week of 2013. This follows the previous week in which the market suffered its biggest fall in two years.

US inflation was higher than expected for the second month in a row. Consumer prices rose 0.5% in January. While the year-on-year rate held steady at 2.1%, the increase was greater than had been expected. Core consumer prices, which exclude food and energy, rose 0.3% over the month, with the year-on-year rate remaining at 1.8%.

US retail sales declined 0.3% in January, but The University of Michigan's survey of consumer sentiment rose to 99.9 in February, its second-highest level since 2004, helped by higher wages, job growth and a warm reception for tax reform.

The Trump administration looks set to impose a tariff of at least 24% on imports of steel, with a smaller tariff on aluminium.


The MSCI Europe gained 3.2% over the week.

Eurozone economic activity expanded by 2.5% in 2017, its strongest performance since 2007. Over the final quarter of 2017, the economy grew by 0.6%. German GDP grew by 0.6% in the final quarter of 2017, with growth driven primarily by strong exports, according to Destatis. Government spending rose, and household consumption was essentially flat. Elsewhere, France also expanded by 0.6%, while Spain’s GDP was slightly stronger at 0.7%.

Italy’s Five Star Movement urged the EU to debate restructuring public debt. The comments could unnerve investors and highlight the unorthodox economic views of the anti-establishment party leading the polls for the nation’s elections in early March. The party has recently toned down its call for a referendum on whether to leave the EU.

Credit rating agency Fitch lifted its sovereign rating on Greece to B, saying that the country seems to be on course for general government debt sustainability, thanks to a growing economy, waning political risks and government budget surpluses that beat creditors’ target.


The Nikkei 225 increased 1.6% over the week.

Japan’s GDP expanded by an annualised rate of 0.5% in the final quarter of 2017. While lower than estimates, this is the eighth consecutive quarter of growth and the longest streak since a 12-quarter stretch that ended in 1989.

Shinzo Abe backed a second term for current Bank of Japan governor Haruhiko Kuroda, signalling that Japan will continue to support its economy. The reappointment makes Mr Kuroda the first person to win a second term at the BoJ since 1961.

Pacific Basin

It was a shortened week for most Asia-Pacific stock markets, due to the lunar new year.

The governor of the Reserve Bank of Australia noted that the central bank saw little case for a near-term rate rise, signalling expectations of gradual progress toward a target inflation range of 2 to 3%.

Singapore’s GDP expanded by a stronger-than-expected 3.6% on a year-on-year basis in the final quarter of 2017. Growth was boosted by healthy” global demand for semi-conductors although the transport engineering and biomedical sectors contracted.

Emerging Markets

Jacob Zuma was forced to resign as president of South Africa. He was replaced by Cyril Ramaphosa, the recently elected head of the ANC. The move was widely welcomed.


The yield on the 10-year US Treasury bond touched 2.94% following stronger than expected US inflation, a level last seen in January 2014, before closing the week at back near 2.9%.

Net outflows from high-yield funds totalled $10.89bn in the week to Wednesday 14 February, their second largest net outflow, according to EPFR Global.


The International Energy Agency predicted rising supply from countries outside Opec, with the potential to leave supply outstripping demand, even with the exporter’s organisation cutting its output.