Posted on September 13, 2017 at 10:05 am GMT
Andreas Georgiou, XM Investment Research Desk
In Asian equities, the Nikkei 225 managed to finish the day higher by a bit less than 0.5%. This is the third straight day that the Japanese benchmark has finished in the green, though its gains were limited relative to the more than 1% added in each of the two preceding days. The Topix, which more broadly gauges Japanese equity performance, closed 0.6% higher, again not managing to match performance from earlier in the week. Hong Kong’s Hang Seng was 0.3% lower and Australia’s S&P/ASX 200 down on the margin. The Shanghai Composite advanced by 0.2%.
Factors weighing on risk appetite in previous weeks, such as extreme natural phenomena and tensions in the Korean peninsula were unable to pose much of a dent to risk sentiment during this week’s trading, pushing global equities to record highs. Specifically, all three major US indices, namely the Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite all closed at all-time highs during yesterday’s trading.
However, it should be noted that geopolitical concerns remain in the background – following yesterday’s agreement on the imposition of fresh sanctions on North Korea, the country said it will speed up the process that will allow it to possess a nuclear weapon that can strike the US. Further complicating things, US Treasury Secretary Steve Mnuchin warned of sanctions on China, should the world’s second largest economy fail to comply with the latest restrictions on North Korea. On top of these, some analysts are warning that the recent rally in equities is overextended.
Turning to Europe, the pan-European Stoxx 600 was down by 0.3% during morning European trading hours. The index, which gauges overall equity performance in Europe, advanced in the five preceding trading days, its longest stretch since April. In the meantime, the blue-chip Stoxx 50 was trading 0.1% higher.
In terms of closely-watched country indices, the FTSE 100 picked up from yesterday’s decline, being down by 0.6%. Yesterday’s surge in sterling is acting as an additional drag for FTSE constituents, which to a large extent rely on sales from overseas markets. The German DAX was down on the margin and the French CAC 40 0.1% up.
Apple suppliers, including Austrian semiconductor manufacturer AMS which was last down by a notable 3.9% rendering itself the Stoxx 600’s worst performing stock, were underperforming on the back of a later shipping date than initially anticipated for Apple’s much publicized iPhone X – the model will be released in early November. Additionally, the smart phone’s price tag of around $1,000 is spurring concerns that demand would weaken in China – an important revenue generator for the tech giant – as well as in other markets. Apple slid 0.4% during yesterday’s trading in the US relative to the day before.
Swiss watchmaker Swatch was also one of Stoxx 600’s worst underperformers, being down by 2.9% in morning European trading on worries Apple’s latest watch would weigh on the company’s share of the market.
Futures markets were last projecting a lower open on Wall Street. Dow Jones and S&P 500 contracts were last down by 0.1% and Nasdaq 100 contracts down by 0.2%.