Posted on September 19, 2017 at 10:03 am GMT
Andreas Georgiou, XM Investment Research Desk


As Japanese markets were back in business after yesterday’s “Respect for the Aged Day” holiday, major indices in the country enjoyed the bullish reaction that equity benchmarks across the world had experienced the day before. Specifically, the Nikkei 225 gained nearly 2.0%, while Japan’s broader index, the Topix, advanced by an also impressive 1.8%, rising to its highest since August 2015. Hong Kong’s Hang Seng lost 0.4%, the Shanghai Composite fell by 0.2% and Australia’s S&P/ASX 200 declined by 0.1% – all three advanced during Monday’s trading.

US President Donald Trump will be addressing the United Nations later today, with the focus being on comments relating to a peaceful resolution of tensions in the Korean peninsula which have on numerous occasions managed to drive market sentiment over the last number of weeks. The Federal Reserve meeting, which is to be completed tomorrow, is also spurring attention. The Fed is expected to maintain rates at their current levels, with investor focus turning to balance sheet normalization as well as on any clues for an additional rate hike to be delivered later in the year. The central bank’s $4.5 trillion balance sheet surely contributed to equities in the US reaching record highs, therefore plans to reduce its size will be closely watched. It should be mentioned though that based on signaling so far, the Fed will only gradually proceed with cuts on balance sheet assets in order to avoid market disruptions.

Yesterday’s rise in equity markets was notable and profit-taking could also have taken place during today’s trading, pushing stocks lower.

Turning to Europe, the pan-European Stoxx 600 was trading 0.1% lower during morning European trading hours, while the blue-chip Stoxx 50 was up by a similar amount. In terms of closely-watched country indices, the FTSE 100 was 0.2% higher, the DAX 0.1% down and the CAC 40 up by 0.1%.

The FTSE’s top-10 list of biggest outperformers was dominated by supermarket chains. Tesco, WM Morrison Supermarkets, Marks & Spencer and Sainsbury’s all made the list with gains ranging from 1.1% to 2.3% (in the order written). Data from Kantar Worldpanel showed increased sales growth – supported by higher inflation – for the top supermarkets.

Airlines and FTSE constituents easyJet and International Consolidated Airlines (IAG) also gained, being last up by 2.5% and 2.0% respectively. The former was the FTSE’s top performing stock. Both companies expressed interest to purchase insolvent carrier Air Berlin.

Remaining within the FTSE, Ferguson was 1.6% up. The construction and plumbing supplies distributor saw Citi upgrade its stock to “buy”. NMC Health was the UK blue-chip index’s worst performing stock, being last down by 2.6%. The healthcare chain and distribution business only yesterday joined the FTSE 100. The company’s performance could be attributed to distortions due to portfolio rebalancing after such a development. Miners Antofagasta (down 1.4%) and Anglo American (down 1.1%) were also performing poorly, making the top-10 list of FTSE underperformers. Metal prices are looking in need of fresh catalysts in order to post a fresh rally.

Dow Jones futures were last trading higher by close to 0.1%, S&P 500 equivalents were up by less than 0.3% and Nasdaq 100 contracts were down by 0.1%. The former two yet again achieved a record high close during yesterday’s trading, with the latter achieving the same feat during last week’s trading.