On 28 July, 2016 – Global stocks mixed

Stocks caught between FOMC and Bank of Japan announcements and a deluge of earnings reports.
United States
Stocks were mixed Thursday as investors worked through more mixed earnings reports. Investors were also waiting to hear from the Bank of Japan (BoJ) on Friday. The BoJ is expected to announce more stimulus for its economy. The Dow Jones industrials slipped 0.1 percent while the S&P and Nasdaq added 0.2 percent and 0.3 percent respectively.
Facebook advanced after the company reported earnings that more than doubled from a year earlier. Whole Foods Market retreated after it reported that sales declined in the quarter, as the company faces more competition from other supermarkets that have been increasing their organic produce options. Ford Motor tumbled after the company reported a 9 percent drop in profit as sales slowed in the United States and struggled in China. The company warned that its full-year guidance might need to be cut. General Motors and Fiat Chrysler also tumbled. Apple advanced.
After markets closed, Amazon.com reported a 31.1 percent rise in quarterly revenue, powered by growth in its cloud services unit and an increase in subscriptions for its Prime loyalty program. Net sales rose to $30.40 billion in second quarter ended June 30 from $23.19 billion a year earlier. The company’s net income rose to $857 million or $1.78 per share from $92 million or 19 cents per share a year earlier.
Google-parent Alphabet posted a 21.3 percent increase in second-quarter revenue, driven by strong advertising sales on mobile devices and for video content. The company’s consolidated revenue rose to $21.50 billion in the three months ended June 30 from $17.73 billion a year earlier. Net income rose to $4.88 billion or $7.00 per Class A and B common stock from $3.93 billion or $4.93 per share.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$12.75 to US$1,341.75. Copper futures were up 1.35 percent to US$2.21. WTI spot crude was down 83 US cents to US$41.09. Dated Brent spot crude was down 83 US cents to US$42.64. The US dollar was up against the yen and pound. It retreated against the euro, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.1 percent. The yields on US Treasury 30 year bond and 120 year note were unchanged at 2.22 percent and 1.50 percent respectively.
Europe
Stocks retreated in choppy trading Thursday thanks to a deluge of corporate earnings reports. Eurozone economic confidence, German unemployment and UK house price data all came in better than anticipated. Investors had their first opportunity to react to yesterday’s statement from the Federal Reserve, which was released after the European close. The Fed held steady on interest rates but opened the possibility of a rate increase in September, noting that “near-term risks to the economic outlook have diminished.” At the same time, traders were cautious before Friday’s Bank of Japan announcement. The FTSE and DAX were down 0.4 percent, the CAC was 0.6 percent lower and the SMI tumbled 1.5 percent.
Adidas advanced after it raised its 2016 guidance for the fourth time this year after reporting a 77 percent jump in second-quarter operating profit. Deutsche Börse was higher after it reported quarterly net profit that topped expectations due to enhanced derivatives trading around the date of the UK referendum. Volkswagen retreated after its second-quarter net profit fell 57 percent, hit by rising financial costs and falling sales. Dialog Semiconductor declined after its second-quarter net income plunged 61 percent from last year.
In Paris, Renault declined after saying it had made little progress towards promised cost savings in the first half of the year. BNP Paribas retreated despite posting better than expected second quarter profit thanks to a surge in bond trading. Carrefour Group dropped after it maintained its full-year outlook despite reporting a decline in its half-year profit due to one-off items. Danone gained after its first-half profit more than doubled, helped by cost control and strong sales of dairy products. Royal Dutch Shell was lower after its second quarter earnings fell as much as 72 percent thanks to lower oil prices and higher charges resulting from its takeover of BG Group. Thomas Cook Group jumped despite reporting a wider pretax loss in the third quarter and lowering its full-year profit forecast. Rolls-Royce Holdings jumped after the aircraft engine maker promised a stronger performance in the final six months of the year after reporting a pretax loss of £2.15 billion for the first-half.
Eurozone economic confidence strengthened unexpectedly in July indicating that the Eurozone shrugged off the negative impact from the “Brexit” vote, while weakness was evident in the European Union and the UK. The economic sentiment index rose to 104.6 in July from 104.4 in June.
Asia Pacific
Asian stocks were mixed as the yen strengthened and oil prices hovered near three-month lows on growing concerns regarding oversupply. The Federal Reserve’s policy statement came along expected lines with no clues on the timing and pace of interest rate increases, the risk of policy disappointment from the Bank of Japan kept investors somewhat cautious.
The Shanghai Composite edged up 0.1 percent after falling earlier in the session on concerns over regulatory clampdown on wealth management products. The Hang Seng retreated 0.2 percent.
The Nikkei lost 1.1 percent as the yen strengthened and investors waited for the latest policy decision from the Bank of Japan. Exporters Canon, Sony, Nissan Motor, Hitachi, Toshiba, Sharp Corp and Panasonic retreated. Nintendo dropped after booking a quarterly operating loss. Sumitomo Mitsui Financial Group and Fujifilm Holdings declined.
The S&P/ASX was up 0.3 percent and the All Ordinaries added 0.4 percent. Miners paced gainers as Dalian iron ore futures extended their rally and a broker raised its three and six month forecasts for the key steelmaking ingredient. Fortescue Metals Group, which continues to push down its production costs, soared. BHP Billiton advanced after doubling its provisions for the Samarco mine disaster. Rio Tinto also was up. Qantas Airways was higher on hopes the oil price downturn could reduce its operating costs. Virgin Australia ended flat despite posting a full-year net loss.
The Kospi was down0.2 percent after the Fed left the door open for a rate hike this year. The Sensex was up 0.7 percent. Domestic sentiment was helped by encouraging earnings reports from Bharti Airtel and Asian Paints, gains in the rupee and robust inflow of portfolio investment, as the government moved a step closer to passage of the much-awaited Goods and Services Tax (GST) Bill in the Upper House of Parliament.
Looking forward
The Bank of Japan makes its monetary policy announcement. Japan releases June data for unemployment, household spending, retail sales, consumer price index and industrial production. Australia releases second quarter producer price index. France and the Eurozone post preliminary second quarter gross domestic product. The Eurozone also releases June unemployment rate and July flash harmonized index of consumer prices. Italy posts June consumer and producer price indices. In the US, first estimate of second quarter gross domestic product will be released along with the employment cost index. July Chicago PMI and final consumer sentiment will also be reported. Canada releases May monthly GDP.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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