On 05 August, 2015 – European markets rebounded on solid private sector growth

Stocks were mixed in Asia Pacific and the US but rebounded in Europe. Economic data were mixed and affected share behavior as did earnings reports.
United States
Both the S&P and Nasdaq advanced for the first day this week but the Dow Jones industrials slipped on Walt Disney’s earnings report. The Dow was down 0.1% while the S&P and Nasdaq advanced 0.4% and 0.7% respectively. Gains in major tech companies Google, Facebook and Apple led the advance on the Nasdaq. The S&P tech sector gained for its best performance in three weeks.
Disney’s shares dropped after it cut its profit forecast for its cable networks unit, spooking the entire industry. The company said a decrease in subscribers to ESPN could hamper its profit in the coming years. Comcast, Discovery Communications and Twenty-First Century Fox retreated. Time-Warner slid after the company kept its full year profit forecast unchanged after earnings topped estimates by a wide margin last quarter. Chesapeake Energy tumbled on worries about hefty debt and spending at the natural gas producer. First Solar shares jumped a day after it reported sharply higher quarterly sales and earnings and said results for the year would top expectations. Priceline Group climbed after the online-booking service posted profit and revenue that easily beat forecasts, helped by rising reservations for hotel rooms and rental cars.
According to the ADP, private employment growth slowed in July but a surge in services industry activity to a near decade high suggested solid economic momentum that strengthens the case for a Federal Reserve interest rate hike this year.
Gold at the afternoon London fixing was down US$5.55 to US$1,085.10. Copper futures were down 0.4% to US$2.35. WTI spot crude was down 58 US cents to US$45.16. Dated Brent spot crude was down 29 US cents to US$49.70. The US dollar was up against yen, Swiss franc the pound and the Australian dollar. It was virtually unchanged against the Canadian dollar. However, it declined against the pound and the euro. The Dollar Index was virtually unchanged. The yield on US Treasury 30 year bond was up 4 basis points to 2.94% while the yield on the 10 year note was up 5 basis points to 2.27%.
Europe
Stocks rebounded from Tuesday’s weak performance. Investors were encouraged by positive earnings reports and some solid European private sector growth. The improvement in Chinese data was also viewed positively. The FTSE was up 1.0%, the CAC gained 1.7%, the DAX added 1.6% and the SMI advanced 0.5%. The Greek stock market continued to retreat.
Beiersdorf climbed after reporting better than expected profits for the first half of the year on the back of a weaker euro and lower costs. Elringklinger surged after the manufacturer reported revenue growth of 14% in the second quarter, matching estimates. Automakers Volkswagen, Daimler, BMW, Renault and Peugeot finished higher.
Société Générale increased after the lender posted 25% growth in second quarter profit, helped by better performance of its equity and trading business. Standard Chartered advanced even though the British bank halved its dividend after reporting a drop in first half profit. The London Stock Exchange advanced after posting better than expected results for its first half. Legal & General climbed after saying that adjusted earnings per share for the first half of the year rose to 9.79 pence from 8.51 pence. Several mining stocks were up including Rio Tinto, BHP Billiton, Glencore and Anglo American.
Eurozone retail sales declined 0.6% on the month after edging up 0.1% in May. The July Eurozone composite PMI slipped to 53.9 from 54.2 in June.
Asia Pacific
Shares were mixed Wednesday as firmer commodity prices and upbeat Chinese services sector data helped to offset lackluster trading in the US on Tuesday. Investors took hawkish comments from a Federal Reserve official expressing support for a September interest rate increase in their stride.
The Shanghai Composite retreated 1.6% after increasing 3.7% on Tuesday on profit taking and news that some brokerages have halted their short selling businesses to stem plummeting shares. China’s services sector PMI expanded at its fastest pace in 11 months in July, offsetting some of the drag from persistent weakness in the manufacturing sector. The Caixin China services purchasing managers index climbed to 53.8 from 51.8 in June. The Hang Seng added 0.4%.
The Nikkei advanced 0.5% as technology shares rebounded after steep losses Tuesday and as strong earnings buoyed construction firms. Semiconductor test equipment supplier Advantest and Tokyo Electron gained. Construction firm Kajima Corp climbed after more than doubling its net income. Medical device maker Terumo soared after unveiling a share buyback. Daikin Industries jumped on a Nikkei report that the company will likely report a 10% increase in operating profit. However, Fast Retailing tumbled after the company reported a decline in same store sales at its Uniqlo clothing stores in Japan for the second straight month in July. Toyota declined after warning of tougher competition in China.
Both the S&P/ASX and All Ordinaries slid 0.4% thanks to weakness in the financial sector, a day after the Reserve Bank of Australia kept interest rates on hold with no mention of any future rate cuts. The big four banks closed down as did investment bank Macquarie Group and Suncorp Group. Miners rebounded. Fortescue Metals Group soared on reports that China’s state-owned companies have approached the company to acquire a stake in the iron ore producer’s infrastructure assets. The company later said that it was “open to commercial discussions” with potential investors on its mining assets but had entered no agreements. The Kospi edged 0.1% higher while the Sensex added 0.5%.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Australia releases July labour force survey. Germany posts June manufacturers’ orders. The UK releases June industrial production. The Bank of England announces its monetary policy decision and releases the minutes from the meeting at the same time. The Quarterly Inflation Report will also be released at that time. In the US, weekly data for jobless claims, money supply and Fed balance sheet will be released.
*Note — all releases are listed in local time.