The threat of the global economic downturn was back after the weak data which was published with respect to China’s imports as well as exports. The market participants were worried about the global downturn as this type of data from the economy like China was indeed a big concern. The trade wars between the US and China has the potential to disrupt the global growth momentum which could, in turn, negatively impact the global markets as well as the sentiments of the market players. Thus, some investors were trying to liquidate the investments which they have made in the equity markets. However, throughout the week, it can be said that the focus of the market players would now primarily be on the earnings reports of the US companies. Thus, there are expectations that the market would react to the news of the companies’ earnings.
Apart from this, the macro-economic factors would also affect the global markets. At the time of writing, the markets were a bit flat while FTSE 100 Index ended trading at 6,895.02 which means that the index was trading slightly higher (0.58%). Also, STOXX 600 was trading at 348.75 during the day and this was also marginally higher. Among the stocks, 3i Group PLC (III) and Ocado Group PLC (OCDO) were trading in green and are up by 2.55% and 2.05%, respectively. On the global front, it can be said that the US Federal Reserve would be patient in the rate hikes. The market players are of the view that the Federal Reserve needs to be dovish when it comes to monetary policy.
On Brexit, the outcome on voting with regards to May’s deal brought a blow to the scenario when Theresa May’s Brexit proposal did not see the light of the day in the Parliament with a historic defeat; and earlier she cleared that she will quit on a heavy defeat.
Richard Turnill, CIS, at BAML says, he assumes a slowdown in global growth in 2019 but also said the risk of recession entering in global market is also noted to some extent this year.
Investors going long on internationally exposed blue-chip FTSE 100 might get a support if scenario turned on a favourable side while tumultuous Brexit uncertainty may cause headache to many investment scenarios.
On equity specific side, Provident Financial, a sub-prime lender plunged 19.29% after management issued a bottom line warning, pointing impairment at its credit card business Vanquis Bank.
Ashmore Group Plc tanked 1.85% after they reported zero growth in Q2 asset under management.
Staffing firm, Hays Plc surged 3.74%, after company reported an 8% increase in Net Fee on headline basis and 9% increase in on like-for-like basis v/s the previous year.
Focusing back on Brexit, many industries and companies will now be looking at the developments cautiously to set the course in future.
With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities.
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