Global Markets Update Monday 28 August 2017

Posted on 29 Aug 2017

In a relatively quiet week, financial markets focused on the annual central bank meeting in Jackson Hole, as they awaited statement from the Federal Reserve and European Central Bank.

United Kingdom

The FTSE 100 rallied 1.1% over the week.

The Labour Party made a U-turn and said it would keep the UK in the EU single market and customs union for a transitional period after leaving the EU.

Shares in lender Provident Financial lost two-thirds of their value after it issued its second profit warning in three months.


The S&P 500 rose 0.8% over the week.

US smaller companies continue to suffer amid concerns that President Trump will fail to deliver on his promised “massive” tax cuts and other stimulus measures.

Janet Yellen defended tighter financial rules introduced in the US after the 2008-2009 financial crisis, in contrast to Donald Trump who has deemed them "a disaster" saying they have stifled growth.

The threat of a US government shutdown edged closer as President Trump warned he was prepared to shut down Congress if it didn’t agree to pay for his proposed Mexican wall. Congress needs to agree the budget by the end of September to avoid a shut down.


The FTSE Eurofirst 300 inched higher by 0.1% over the week.

The IHS Markit eurozone composite purchasing managers’ index rose to 55.8 in August, picking up from its hiatus in July. Manufacturing activity rose from 56.6 to

57.4, while services fell back from 55.4 to 54.9. In Germany, activity in both the manufacturing and service sectors increased over August, while in France, even though services slowed slightly, manufacturing activity expanded at its quickest pace in six years.

The Ifo index of German business sentiment eased slightly in August but the forward-looking component hit its highest level since January 2014.

Business confidence in France reached its highest level since April 2011 in August.


The Nikkei 225 slid 0.1% over the week.

Japan’s core consumer prices, which exclude food, rose to a year-on-year rate of 0.5% in July, up from 0.4% in June. After three months of no change, core consumer prices, which exclude both food and energy, rose 0.1%.

The Nikkei-Markit Japan flash manufacturing purchasing managers’ index rose to 52.8 in August, up from 52.1 in July, helped by stronger output, new orders and employment.

Pacific Basin

Indonesia’s central bank unexpectedly cut its benchmark interest rate from 4.75% to 4.5%. Against a backdrop of falling inflation, Bank Indonesia said it hoped the cut will help strengthen Indonesia’s banking sector and support economic growth.

Thailand’s GDP accelerated to a year-on-year rate of growth of 3.7% in the second quarter, its fastest pace in four years, helped by trade and public spending.

Emerging Markets

Brazil announced a massive privatisation drive, aiming to raise finance for infrastructure investment and help boost growth.


The yield on the 10-year US Treasury bond closed the week at 2.17%, a drop of 2bps over the week.

US junk bonds are showing signs that they may be under pressure as hopes of a stimulus package from President Trump fade. The yield spreads over Treasuries of US high-yield bonds has climbed 39bps since the end of July, reaching levels last seen in April.



Oil prices rose amid fears that Hurricane Harvey would disrupt US output.

Copper hit a fresh three-year high in London while nickel touched a nine-month peak.