Daily global market update

On 16 January, 2017 - Most stock indices retreated

Trading was quiet with US markets closed for holiday.

United States

US markets were closed for Martin Luther King Day holiday.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$12.65 to US$1,203.00. Dated Brent spot crude was up 18 US cents to US$55.63. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen.


Stock indices retreated Monday with bank and automotive stocks among the weakest performers. Bank stocks retreated after the Canadian rating agency DBRS cut Italy's sovereign credit rating. The pound dropped against the US dollar and euro on growing concerns about a 'hard' Brexit. Investors are eagerly awaiting a speech from UK Prime Minister Theresa May Tuesday when she is expected to outline her Brexit. Trading activity was relatively subdued on a light day for economic data and with US markets closed. The IMF lifted its growth forecast for the UK Monday. The FTSE slipped 0.1 percent, the CAC declined 0.8 percent, the DAX retreated 0.6 percent and the SMI lost 1.1 percent.

Hugo Boss jumped after saying it expects 2016 operating profit at the upper end of prior range. Deutsche Bank and Commerzbank declined along with Société Générale, BNP Paribas and Credit Agricole. Automakers Volkswagen, BMW, Daimler, Peugeot and Renault retreated. In Paris, Essilor International and Italy's Luxottica, the maker of Ray-Ban sunglasses, have agreed a €46 billion merger to create a global leader in the fast-growing eyewear industry. Both companies rallied.

Burberry advanced on news its incoming chief executive Marco Gobbetti will take up the position from July 5. Royal Bank of Scotland was lower on a broker downgrade. Lloyds Banking Group and Barclays also were down. UniCredit dropped in Milan on concerns that the decision by Canadian rating agency DBRS to cut Italy's sovereign credit rating could raise borrowing costs for the country's struggling banks.

The pound dropped below US$1.20 to a three-decade low against the dollar (excluding its October "flash crash") following media reports that Prime Minister May will signal a "hard" Brexit for Britain from the European Union in her speech Tuesday. A "hard" Brexit scenario would prioritize immigration controls and bilateral trade deals that would see Britain leaving the EU's single market and customs union. A weak currency benefits the FTSE’s international, dollar-earning firms, giving them a currency-related accounting boost. In 2016, the FTSE 100 was the best performer among major regional indexes in Europe, gaining more than 14 percent.

Asia Pacific

Asian stocks closed mostly lower Monday as the British pound hit a three-month low on 'hard Brexit' fears and Chinese Premier Li Keqiang said the economy will face greater pressure and difficulties this year amid an increasingly complicated international setting. Investors were also looking forward to UK Prime Minister Theresa May’s speech Tuesday regarding Brexit. In addition, investors are looking forward to US President-elect Donald Trump's inauguration on Friday for any clarity on his economic plans.

The Nikkei was down 1.0 percent and the Topix lost 0.9 percent as the yen remained stronger against rivals on hard Brexit fears and official data showed Japan's core machinery orders fell in November at their fastest pace in seven months. Private-sector machinery orders, excluding volatile ones for ships and those from electric power companies, tumbled a seasonally adjusted 5.1 percent on the month, more than reversing a 4.1 percent rise in the previous month. Takata slumped as the airbag maker pleaded guilty to criminal wrongdoing after hiding a fatal defect in its airbag inflators. Nintendo extended Friday's losses after unveiling details about the Nintendo Switch. Honda Motor closed marginally lower after saying it plans to sell more than 5 million vehicles worldwide next fiscal year.

Both the S&P/ASX and All Ordinaries advanced 0.5 percent. BHP Billiton, Rio Tinto and Fortescue Metals Group rallied after iron ore futures in China soared to a three-year high. Gold miners Evolution, Newcrest, Northern Star and Regis Resources rose as gold prices edged higher on uncertainty over Trump's economic policies. Duet Group jumped after the company agreed to Hong Kong billionaire Li Ka-shing's A$7.3 billion buyout offer.

The Shanghai Composite was down 0.3 percent, extending losses for the fifth consecutive session on worries about slowing growth, capital outflows and reserve depletion. The index fell as much as 2.2 percent at one point early in the day. The Hang Seng was down 1.0 percent. The Kospi retreated 0.6 percent as investors looked ahead to Trump's inauguration. Market bellwether Samsung Electronics tumbled after prosecutors accused Samsung chief Jay Y Lee of bribery and sought an arrest warrant. The Sensex was up 0.2 percent.

Looking Forward

Australia releases November home loans. The ECB posts its fourth quarter 2016 lending survey. The UK releases December consumer and producer price indices. Germany reports January ZEW survey. In the US, January Empire State manufacturing survey will be released.

Global Stock Market Recap

Global Stock Market Recap

Bond markets

Bond markets

Currencies and commodities

Currencies and Commodities

The Longer-Term Perspective

The table below demonstrates that while we may experience some short-term weakness in markets, the longer-term performance remains encouraging.

equity market

*Note — all releases are listed in local time.

Anne D Picker
Chief Economist

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.

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