On 21 April, 2015 – European markets rose on strong corporate earnings reports

Stock indices in both the Asia Pacific and Europe mostly advanced while those in the US were mixed. With virtually no new economic data, earnings reports were in focus.
United States
US stocks were mostly lower as major companies reported a mixed batch of earnings results. The Dow Jones industrials and S&P were down 0.5% and 0.1% respectively. However, the Nasdaq added 0.4%.
Harley-Davidson dropped after its earnings fell short of forecasts. Kimberly-Clark jumped after it reported income and revenue that easily beat forecasts. DuPont declined after it said the rising dollar hit its results in the first quarter as earnings and sales shrunk. The company also lowered its forecast for full year profits. Teva Pharmaceuticals proposed buying Mylan NV, another maker of generic drugs, for more than US$40 billion in cash and stock. The offer depends on Mylan’s dropping its proposed acquisition of another drug maker, Perrigo. Both Teva and Mylan were up on the day.
United Technologies said its sales were down about 1% in the first quarter because of the strengthening dollar and a decline in its Sikorsky aircraft segment. Travelers Companies declined after it said its first quarter profit declined from an unusually strong period a year earlier, thanks partly to lower net investment income. IBM declined after it reported a 12% decrease in revenue, hurt by the stronger US dollar and weakness in its hardware business.
Verizon advanced after it reported that it added a net 565,000 retail postpaid subscribers in the first quarter ended March 31. Total revenue in the company’s wireless business rose 6.9% to US$22.33 billion. Net income attributable to Verizon was US$4.22 billion or US$1.02 per share in the first quarter compared with US$3.95 billion or US$1.15 per share a year earlier. Revenue rose to US$31.98 billion from US$30.82 billion.
Yahoo’s first quarter revenue dropped 4%. Net income attributable dropped to US$21.2 million or 2 US cents per share for the quarter ended March 31 from US$311.6 million or 29 US cents per share a year earlier. Revenue excluding fees paid to partner websites declined to US$1.04 billion from US$1.087 billion.
Broadcom reported a 4% rise in quarterly revenue helped by strong sales of its Wifi and broadband chips to smartphone makers such as Apple and Samsung. Net income rose to US$209 million or 34 US cents per share in the first quarter ended March 31 from US$165 million or 28 US cents per share a year earlier. Revenue rose to US$2.06 billion from US$1.98 billion.
Gold at the afternoon London fixing was down US$1.20 to US$1,195.30. Copper futures were down 1.0% to US$2.70. WTI spot crude was down US$1.23 to US$55.26. Dated Brent spot crude was down US$1.32 to US$62.13. The US dollar was up against the yen and the Canadian and Australian dollars. It was virtually unchanged against the euro. However, it declined against the pound and the Swiss franc. The Dollar Index was up 0.1%. The yields on both the US Treasury 30 year bond and the 10 year note were up 3 basis points to 2.58% and 1.91% respectively.
Europe
Most stock indices advanced Tuesday. Although the markets had been up sharply in early trading thanks to some strong corporate financial reports, gains were pared after the unexpected decrease in German economic sentiment. The FTSE added 0.2%, the CAC edged up 0.1%, the DAX gained 0.4% and the SMI was 0.6% higher.
On Monday, Greece’s government issued a decree requiring public bodies such as state owned companies and public pension funds to transfer their cash reserves to the central bank as the country’s cash reserves continue to dry up. Eurozone finance ministers are due to meet in Riga, Latvia on Friday. However, a deal on fresh aid is unlikely to be agreed before the Eurogroup meeting on May 11, a day before Greece must pay €780 million due to the International Monetary Fund.
SAP climbed after the company backed its targets for the full year. It reported a 15% rise in first quarter operating profit, helped by a weak euro. Daimler and BMW advanced along with Renault and Peugeot. Publicis Groupe gained after it reported a 31.7% increase in first quarter revenues. ARM Holdings increased after the company posted a 36% gain in its net profit for the first quarter, buoyed by robust sales of Apple iPhones and a consumer shift to 4G mobile devices. Sky climbed after it announced that it added 242,000 new customers in the first quarter. Associated British Foods retreated after the company announced that it now expects a decrease in its full year earnings. Rio Tinto declined after its first quarter iron ore shipments declined by 12%. Credit Suisse Group was down. The bank’s first quarter net profit was up 23% from a year ago reflecting mainly improved performance in its investment banking division and the continued focus on cost savings. Actelion advanced after its first quarter profit increased by 25%. The company also increased its full year forecast.
German investor confidence retreated for the first time since October as global weakness and Greece crisis weighed on domestic prospects according to the ZEW survey. The indicator of economic sentiment dropped unexpectedly by 1.5 points to 53.3 in April.
Asia Pacific
Most share indices advanced Tuesday, drawing support from a rally in the US and European markets after China unveiled fresh stimulus to shore up its economy over the weekend. While Chinese, Hong Kong and Japanese shares rallied, gains elsewhere across the Asia-Pacific region were kept in check by ongoing concerns about Greece’s debt woes.
The Shanghai Composite rebounded 1.8% Tuesday. Sentiment was bolstered after China’s securities regulator moved to allay fears of a clampdown, saying the new short selling measures were not intended to encourage short selling or depress the market, but aimed at maintaining the healthy development of the market. The Hang Seng jumped 2.8%.
The Nikkei added 1.4% thanks to a weakening yen and as investors bet on stronger growth in company earnings. Exporters spearheaded the rally, with Honda Motor, Mazda Motor, Toyota Motor, Kyocera, Nissan Motor, Fanuc and Panasonic gaining. Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial also advanced. NEC was up on a Nikkei report that the company’s fiscal 2015 profit might rise to an eight year high. Daiichi Sankyo soared on news that it would sell its 9% stake in Indian pharma giant Sun Pharmaceutical Industries. Canon gained on a Nikkei report that its operating profit for the quarter ended March could decline 15%. Sony was up after launching the latest version of its flagship Xperia Smartphones in Japan.
The S&P/ASX and All Ordinaries added 0.7% and 0.6% respectively thanks to the expansion of monetary stimulus in China and a rebound in iron ore prices. Adding to investor optimism were the minutes from the Reserve Bank of Australia’s April 7 board meeting. The minutes revealed that the RBA is waiting for economic data, including inflation figures due Wednesday, before deciding on another interest rate cut. The Kospi slipped 0.1% on institutional selling amid concerns about a possible disappointing earnings season and lingering worries over Greece’s future in the Eurozone. The Sensex lost 0.8%.
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*
Japan reports March merchandise trade. Australia posts first quarter consumer price index. The Bank of England publishes the minutes from its monetary policy committee meeting held earlier this month. In the US, March existing home sales will be released.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday