Asian markets overnight more or less mirrored the extreme US falls late yesterday. While the Nikkei 225 was down -2.32% the Shanghai Composite and Hang Seng plummeted -4.61% and -3.36%. The bigger question is whether the sell-off is a short-term correction or a harbinger of further sustained falls; either way, an equilibrium level is being sought. Certainty feels some distance off.
While some of the correction has been pushed by rising bond yields – with worry they could hit +3% – the bigger driver was news last week of rising US wages, which would goad borrowing costs higher. It’s not just about US borrowing costs; it’s worry about higher central bank interest rates everywhere. Despite huge falls in the last week US stocks are still +10% up on a year ago, it’s worth noting.
Overnight the pound was +0.24% higher against the US dollar at 1.3966 while the pound gained +0.15% against the euro to 1.1382. UK trade balance numbers emerge at 9.30am plus UK construction, industrial and manufacturing output updates. There may be some more insight into Bank of England future rate policy later with deputy governor Jon Cunliffe speaking in the US. It's widely expected further stock market falls will continue today.
- UK FTSE 100 7,170.69 -1.49%
- DAX 12,260.29 -2.62%
- CAC 40 5,151.68 -1.98%
- Euro Stoxx 600 374.03 -1.60%
- Dow 23,860.46 -4.15%
- S&P 500 2,581.00 -3.75%
- Nasdaq 6,777.16 -3.90%
- Nikkei 225 21,382.62 -2.32%
- Gold 1,320.90 +0.14%
- Oil WTI 60.57 -0.95%
Japan warns on Brexit tariffs
Yesterday Japan’s UK ambassador made it clear that Brexit trade barriers would see Japanese companies leave the UK. A rash of Japanese businesses, including Honda and Nissan, made a high profile visit to Downing Street for trade discussions that included Theresa May and chancellor Philip Hammond.
“If there is no profitability of continuing operations in the UK - not Japanese only - then no private company can continue operations. It is as simple as that," Ambassador Koji Tsuruoka told the media following the meeting.
Japanese car makers are particularly concerned about the potential for tariffs of up to +10%, plus possible customs delays. Many Japanese drug companies have plumped for a UK base, not to mention several major banks including Daiwa Securities and Nomura.
Shaftesbury PLC postive on trading
Earlier West End retail property operator Shaftesbury PLC confirmed high footfall and robust trading through 1 October to 8 February with positive occupancy levels. It claims “good progress” in letting recent larger schemes with 52% of completed space now let or under offer.
“The economic strength and resilience of London's West End lies in its enduring local, national and global appeal as a destination of choice for people and businesses.” The real estate investment trust has a 14.9 acre West End portfolio overall.
Breaking news: a sale has been in the offing for some time but the Express newspaper group – Daily Express and Daily Star – has been sold to key rival Trinity Mirror for £126.7m though some of the sale price will be deferred over several years. It’s thought former owner Richard Desmond will hold a minority 10% stake in Trinity Mirror so remaining a significant shareholder.