Investors continue to monitor earnings closely along with the deluge of fresh economic data.
United States
After initially declining, stocks turned mixed over the course of trading day on Friday. The indices climbed well off their early lows, with the Dow Jones industrials turning positive. The Dow managed to gain 0.2 percent while both the S&P and Nasdaq slipped 0.1 percent. For the week, the Dow added 1.2 percent but the S&P was virtually unchanged (down 0.44 point) and the Nasdaq lost 0.2 percent. The initial weakness Friday reflected a negative reaction to the latest batch of earnings news including disappointing results from Amazon.com.
Amazon.com retreated after the company reported second quarter earnings that came in below expectations. Exxon Mobil declined after it reported second quarter earnings that also came in below expectations despite better than expected revenues. However, Chevron climbed. Intel was higher after reporting second quarter results that beat estimates on both the top and bottom lines. Western Digital posted a steep loss despite reporting better than expected fiscal fourth quarter results.
Starbucks declined after it lowered its forecast for earnings this fiscal year. Goodyear Tire & Rubber sank after it gave a forecast for 2017 operating income that fell short of expectations. Altria Group tumbled after the US Food and Drug Administration announced it wants to reduce nicotine levels in cigarettes and move smokers toward potentially less harmful e-cigarettes. US traded shares of British American Tobacco also declined.
Selling pressure waned during the day as traders digested the first estimate of gross domestic product for the second quarter. GDP climbed at an annualized rate of 2.6 percent in the second quarter after rising by a downwardly revised 1.2 percent in the first quarter. Final July University of Michigan consumer sentiment reading deteriorated to 93.4 from the final June reading of 95.1.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.80 to US$1,264.90. Copper futures were down 0.1 percent to US$2.88. WTI spot crude was up 67 US cents to US$49.71. Dated Brent spot crude was up US$1.03 to US$52.52. The US dollar was down against the yen, euro, pound and the Canadian and Australian dollars. The currency advanced against the Swiss franc. The Dollar Index was down 0.6 percent. The yield on US Treasury 30 year bond was down 3 basis points to 2.90 percent while the yield on the 10 year note was down 2 basis points to 2.29 percent.
Europe
European stocks retreated Friday but were mixed for the week. Investor sentiment weakened after Renault and BT Group reported disappointing financial results. Weak numbers from UBS also weighed on the bank stocks. The FTSE was down 1.0 percent, the CAC declined 1.1 percent, the DAX retreated 0.4 percent but the SMI managed to add 1.52 points. For the week, the FTSE declined 1.1 percent and the DAX lost 0.6 percent. The CAC added 0.3 percent and the SMI was 0.9 percent higher.
Linde declined despite a 2 percent increase in second quarter operating profit. Adidas climbed after the company increased its full year guidance. Renault dropped despite reporting a 59 percent surge in first-half profit on increased volume and with a larger payout from its holding in Nissan Motor. International Consolidated Airlines Group slipped despite reporting higher second-quarter profit. BT Group dropped after reporting weak results in its first quarter.
UBS was down in Zurich on concerns over client activity and margins in its wealth management division, despite reporting 14 percent higher profits in its second quarter. Crédit Suisse Group gained after posting a profit in its second quarter, compared to last year’s loss. Julius Baer also was lower. Roche slipped following Thursday’s financial report. Novartis also declined. Nestlé was higher along with Richemont and Swatch. Barclays declined.
Eurozone economic confidence strengthened unexpectedly in July to near a decade-high. The economic sentiment index rose to 111.2 in July from 111.1 in June. This was the highest reading since the 2007 financial crisis. France’s economic growth stabilized in the second quarter. Gross domestic product expanded 0.5 percent on the quarter for a second consecutive quarter.
Asia Pacific
Asian stocks declined Friday as investors took profits following a selloff in US technology stocks overnight. Disappointing earnings results from Amazon.com intensified worries about corporate earnings.
The Nikkei was down 0.6 percent and the Topix retreated 0.3 percent despite the release of better than expected economic data. For the week, the Nikkei was down 0.7 percent while the Topix was 0.5 percent lower. Toshiba tumbled amid speculation that the company is at a great risk of being de-listed following a delay in the sale of the company’s flash memory unit. Reuters reported that Toshiba has agreed to pay $2.168 billion to SCANA to exit from two incomplete nuclear projects undertaken by Toshiba subsidiary Westinghouse. In economic news, Japan’s June unemployment rate slid to 2.8 percent from 3.1 percent in May. Household spending was up 2.3 percent from a year ago. Consumer prices excluding fresh food were up 0.4 percent on the year for a second month.
The S&P/ASX tumbled 1.4 percent and the All Ordinaries was 1.3 percent lower. Both were 0.3 percent lower on the week. BHP Billiton and Rio Tinto declined. ANZ Banking, Westpac, Commonwealth Bank and NAB all declined. Woodside Petroleum was lower while Santos gained.
The Shanghai Composite edged up 0.1 percent while the Hang Seng declined 0.6 percent. On the week, the Shanghai Composite added 0.5 percent while the Hang Seng added 1.0 percent.
The Kospi was down 1.7 percent and was down 2.0 percent on the week. The Sensex was 0.2 percent lower Friday but up 0.9 percent on the week.
Looking forward

Central Bank activities

August 1

Australia

Reserve Bank of Australia Monetary Policy Announcement

August 2

India

Reserve Bank of India Monetary Policy Announcement

August 3

UK

Bank of England Monetary Policy Announcement

BoE Quarterly Inflation Report

The following indicators will be released this week…

Europe

July 31

Eurozone

Harmonized Index of Consumer Prices (July flash)

Unemployment Rate (June)

August 1

Eurozone

PMI Manufacturing (July)

Germany

PMI Manufacturing (July)

France

PMI Manufacturing (July)

August 3

Eurozone

PMI Composite (July)

Retail Sales (June)

Germany

PMI Composite (July)

France

PMI Composite (July)

August 4

Germany

Manufacturers’ Orders (June)

Asia

July 31

Japan

Industrial Production (June)

China

PMI Manufacturing (July)

August 1

Japan

PMI Manufacturing (July)

India

PMI Manufacturing (July)

August 3

Australia

Merchandise Trade (June)

August 4

Australia

Retail Sales (June)

Americas

July 31

Canada

Industrial Product Price Index (June)

United States

Chicago PMI (July)

Pending Home Sales (June)

August 1

United States

Personal Income and Spending (June)

PMI Manufacturing (July)

ISM Manufacturing Index (July)

Construction Spending (June)

August 2

United States

ADP Private Employment (July)

August 3

United States

ISM Nonmanufacturing Index (July)

Factory Orders (June)

Initial Unemployment Claims (week ending prior Saturday)

August 4

Canada

Labour Force Survey (July)

International Trade (June)

United States

Employment Situation (July)

International Trade (June)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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