Bad start to this week for European and US equity gauges
On Monday, European and US equity gauges moved lower after Asian markets were rattled by North Korea firing missiles into the Sea of Japan. US president Donald Trump’s latest spat with the country’s security services may also be damping the mood somewhat as markets continue to price in a rate rise by the Federal Reserve next week.
US index futures suggested the S&P 500 would fall seven points to 2,376 when trading gets under way later in New York.
South Korea’s Kospi Composite index fell as much as 0.5% after news of the missile launch broke. Lotte Shopping, the retail arm of South Korea’s fifth-largest conglomerate, sank 4% on reports that some of the company’s shops in China had been shut by authorities after it agreed last week to provide land to host a US missile defence system.
The fall in US equity futures also came as traders got the first chance to react to news that President Donald Trump has accused the Obama administration of tapping his phones in the run-up to November’s election.
US markets are also impacting Europe, where the Stoxx 600 index was off 0.4% as dealers also welcomed news of an £11bn merger in the asset management sector, but reacted negatively to Deutsche Bank’s plan to raise €8bn as part of a restructuring programme.
Asia-Pacific reactions to events on the Korean peninsular were ultimately muddled. In Tokyo the broad Topix index was off 0.2%, led by declines in financial and utilities stocks, but Hong Kong’s Hang Seng index added 0.2% as casinos pushed higher following data last week showing Macau gambling revenue increased more than expected. On mainland China the Shanghai Composite gained 0.5% after Beijing cut its growth target for 2017 to 6.5%, compared with 2016’s target of 6.5% to 7%.
Sovereign bonds benefited from the slightly sour broader market mood. The yield on US 10-year Treasuries were down 2 basis points to 2.47%, while equivalent maturity German Bunds eased 2bp to 0.33%.
Oil prices were lower as brent crude, the international benchmark, was 0.7% lower to $55.51 a barrel and West Texas Intermediate, the US marker, is down 0.5% to $53.04.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.