Markets & Key Events | 26th April 2019

The earnings season in the US is approximately one third of the way through and so far, results are mixed. The Nasdaq composite, heavily weighed by Technology stocks, touched fresh highs after a surge in Facebook and Microsoft. Both companies comfortably beat profit estimates, and Microsoft became the third tech giant to reach the $1 trillion market capitalisation mark. Better results this week have been somewhat overshadowed by weaker earnings in global industrials conglomerate 3M. Shares of the company fell 13% after its weaker earnings were attributed to slower demand in key markets such as China.

As of 12pm London Time, the tech heavy Nasdaq is up 1.5% over the week, with the S&P 500 up 0.7%. Markets fared worse elsewhere however, with the UK FTSE all share down 0.42%, and the Eurostoxx 600 only higher by 0.02%. The Japanese Topix is flat at 0.06%, though the Shanghai Composite suffered heavy losses, down 5.64%.

On the economic front, investors are keenly anticipating US growth figures as they continue to assess the health of the global economy. GDP is expected to grow at 2%, with figures due to be released at 1.30pm London Time.

Asia pacific

Chinese stocks tumbled late this week after concerns that Beijing could pull back on stimulus measures. A statement issued by the government emphasised the economy’s solid start to the year but expressed some concerns as to the possible over heating of its financial and real estate markets. Meanwhile, Japanese industrial production figures further weighted on the outlook over global growth. Production has fallen at its fastest pace in 4 years, down 4.6% year on year in March.

Australian markets bucked the trend in Asia, with the S&P/ASX 200 up 2.01% over the week. A disappointing headline inflation print on Wednesday propelled the local share market upwards as the prospect of the Reserve Bank of Australia cutting interest rates as early as May rose sharply. Inflation came in at zero for the first quarter of the year.

Europe and the United Kingdom (UK)

Corporate mergers and acquisitions news caught the headlines in Europe. In the UK, regulators blocked a £7bn merger between supermarket chains Sainsbury and ASDA saying the deal would lessen competition at both a national and local level and ultimately hurt consumers. Sainsbury, whose shares fell sharply on the news, disagreed with the ruling however, but said it will no longer pursue the deal.

In Germany, after six weeks of talks, Deutsche Bank and Commerzbank ended their merger plan. Despite the merger being backed by the Government, Germany’s two biggest listed lenders cited that there were too many hurdles to justify pursuing a complex deal that would have formed one of the eurozone’s largest lenders. The collapse of merger talks now leaves the two banks looking for new ways to cut costs and stem revenue losses, while contending with low interest rates.

Fixed Income

Major government bonds appreciated slightly, with bond yields, which move inversely to price, falling somewhat lower. The 10-year US treasury yield fell 3 basis points over the period to 2.527%. UK and German 10-year government bonds both fell 4 basis points, though it should be noted that German government bond yields have slipped back into negative territory at -0.016%.

The Bank of Japan’s (BOJ) Monetary Policy Board left its policy unchanged as expected. The BoJ’s short-term policy rate for excess reserves remains -0.1% while the target level for the long-term 10-year yield remains anchored at around 0%.


Oil prices continued to rally this week, with Brent Crude reaching as high as $75 per barrel before settling at $72.82 per barrel, to end the week higher by 1.18%. The price was supported by the US administration’s decision to remove waivers that allowed China, India, Japan, South Korea and Turkey to import Iranian oil.  By demanding these countries no longer import oil from Iran, the US is escalating its efforts to put pressure on the regime in Tehran and cut off its major revenue source.

The information provided above is for Professional Advisers: All data has been sourced from Lipper. Any investment must be made in conjunction with reading the relevant KIID or Investment Mandate. Clients should be aware that the value of investments and the income from the may fall as well as rise and they may not get back the amount originally invested. Investors should note that the views expressed and information given were current at the time of publication but may no longer be so and/or may have been acted upon by the Investment Manager already. Source SmartIM