Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
There’s an edgy mood in the financial markets today, as investors worry about geopolitical issues and the state of the global economy, and wonder if a correction could be looming.
Japan’s Nikkei share average has suffered its biggest fall in over eight months, tumbling by almost 2%.
Other Asian markets also dropped, following a selloff on Wall Street yesterday, and Europe is expected to follow today.
A range of factors are being blamed – including the stalled Brexit talks, and concerns over whether America’s tax reforms will actually deliver growth (or even be finalised at all).
Another factor: the news that US President Donald Trump will recognise Jerusalem as Israel’s capital and set in motion the relocation of the U.S. Embassy, despite warnings that this will fuel tensions in the Middle East.
Traders are also citing concerns over US politics, where a three-month suspension of America’s debt ceiling is about to expire. That could force the US Treasury to start using ‘extraordinary measures’ to avoid breaching the cap, which might buy a few months grace…
2017 has been a sterling year for the markets, but some commentators suggest that the rally may be fizzling out.
Michael Hewson of CMS Markets says:
Having seen some decent gains so far this year there appears to be increasing evidence that markets are starting to look a little tired. The first clues appeared yesterday when US markets after racing out of the blocks on Monday found it difficult to hold onto a lot of their gains, even if the Dow did manage to finish the day higher. The S&P500 on the other hand declined for the third day in succession, its worst run of losses since August.
This declining momentum has been something that has been particularly notable in European markets since the peaks back in early November, and while we have managed to find some level of support for most of the past week or so, the subsequent rebounds have been getting shallower.
Overnight, the latest Australian growth figures have missed expectations. Australia’s GDP rose by 0.6%, weaker than the 0.8% which analysts had expected.
Over in China, a senior regulator warned of tougher oversight over financial markets and illegal financial dealings, helping to push shares down in Shanghai.
Commodities are also having a bad day, with Shanghai copper prices falling by 3% on concerns that Chinese growth could slow next year.
Investors will be looking to the latest US jobs report, to see how America’s economy fared last month. Plus, the Bank of Canada will be in the spotlight as it announces its latest monetary policy decision.
- 1.30pm GMT: The US ADP employment report, showing how many private sector jobs were created in America last month
- 3pm GMT: The Bank of Canada’s interest rate decision
- 3.30pm GMT: US crude oil inventory figures