Global stock markets enjoyed a largely positive week after data provided further evidence that the United States economy remains in relatively good health.
The recessionary fears that weighed on share prices at the start of August appear to have been dispelled – for the time being at least. Second-quarter earnings figures for one of the world’s largest semiconductor companies had been eagerly awaited, and while the results were slightly better than forecast, the market’s reaction was decidedly lukewarm. Elsewhere, rising tensions in the Middle East and a production shutdown in Libya drove oil prices higher.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.4% up for the week so far, although the S&P 500 fell 0.8% as it eased back from last week’s all-time highs. Latest data showed a surprise rise in consumer confidence in the US, while house prices rose more than expected. GDP figures for the second quarter were revised upwards, based on higher consumer spending. However, more up-to-date statistics showed there had been an unexpected fall in equipment orders in July. Technology stocks fell back later in the week after trading results from a major player in the artificial intelligence boom were merely solid rather than stellar – an indication, perhaps, of how far expectations in the sector have risen.
UK
In the UK, the FTSE 100 closed on Thursday 0.6% up for the week so far after oil and commodity prices bounced back from a recent downturn. However, the economic picture in Britain remained gloomy, with signs of a further slowdown in retail sales and more weakness in the property sector. The new Labour government revealed further details of the dire state of the UK’s public finances, and investors fear the tax rises expected in the autumn could create further problems for the UK economy.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 1.5% for the week, while France’s CAC 40 gained 0.8%. News that the rate of inflation in Germany has fallen to 2%, in line with the European Central Bank’s target, raised hopes that interest rates in the eurozone could be cut again next month. A further reduction in borrowing costs could provide some support for the ailing German economy; its decline in the second quarter was confirmed, while a more recent survey showed a further drop in consumer confidence in the country.
Asia
In Asia, the Hang Seng index in Hong Kong gained 1% as figures showed an increase in industrial profits, spurred by growth in high-tech manufacturing. However, China’s trade battles with the European Union and the US continued to weigh on sentiment. Japan’s Nikkei 225 index of leading shares, meanwhile, ended Thursday unchanged for the week. The Bank of Japan warned of further interest rate increases as it attempts to bring inflation under control and shore up the value of the yen. While this is potentially good news for the Japanese economy, a stronger currency tends to have a negative impact on the Tokyo stock market.
August 23 | August 29 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8327.8 | 8379.6 | 0.6 |
FTSE 250 | 21189.5 | 21031.1 | -0.7 |
S&P 500 | 5634.6 | 5592.0 | -0.8 |
Dow Jones | 41175.1 | 41335.1 | 0.4 |
DAX | 18633.1 | 18912.6 | 1.5 |
CAC 40 | 7577.0 | 7641.0 | 0.8 |
ACWI | 831.3 | 827.3 | -0.5 |
Hong Kong Hang Seng | 17612.1 | 17786.3 | 1.0 |
Nikkei 225 | 38364.3 | 38362.5 | 0.0 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 29 August 2024.
