On 21 July, 2015 – European markets slid on profit taking

Stocks languished on a day with little news. Some disappointing earnings sent US stocks lower.
United States
US stocks ended broadly lower after a handful of companies turned in disappointing quarterly results. The Dow Jones industrials lost 1.0%, the S&P retreated 0.4% and the Nasdaq slipped 0.2%. Volume was light.
With no economic data on the calendar, investors focused on earnings. United Technologies sank after it lowered its forecast for the year and reported revenue that did not meet expectations. The company also cut its outlook for 2015, citing weaker sales of Otis elevators in Europe and China’s slowing economy. IBM also dropped after turning in another decline in revenue. Verizon was another company whose revenue did not live up to forecasts. However, Harley-Davidson jumped after its earnings beat estimates. Chesapeake Energy slid on news that the energy company has eliminated its annual dividend and will redirect the money into its 2016 capital spending program.
Microsoft said its revenue fell 5.1% in its latest quarter, hurt by continued weak PC demand. The company posted its biggest quarterly loss ever on a big write-down and other items related to the Nokia mobile phone business acquired last year. For the period ended June 30, revenue decreased to US$22.18 billion from US$23.38 billion a year earlier. Apple reported a 32.5% rise in quarterly revenue, helped by a 35% jump in iPhone sales. Net income rose to US$10.68 billion or US$1.85 per share in the third quarter ended June 27 from US$7.75 billion or US$1.28 per share a year earlier. Revenue rose to US$49.61 billion from US$37.43 billion.
Gold at the afternoon London fixing was up US$1.00 to US$1,105.60. Copper futures were down 0.2% to US$2.48. WTI spot crude was up 21 US cent to US$50.36. Dated Brent spot crude was up 42 US cents to US$57.07. The US dollar was up against the pound. However it declined against the yen, euro, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.9%. The yield on US Treasury 30 year bond was down 1 basis point to 3.08% while the yield on the 10 year note slipped 3 basis points to 2.34%.
Europe
Stocks declined across the board Tuesday after nine days of gains as investors locked in some profits. As concerns about Greece continue to subside, investors have begun to shift their focus to corporate earnings results. The FTSE slipped 0.3%, the CAC retreated 0.7%, the DAX declined 1.1% and the SMI was 1.0% lower.
Greece cleared its first hurdle in the bailout crisis by repaying the money due to the International Monetary Fund and the European Central Bank with the European Commission’s €7.16 billion bridge-loan and banks in the country opened partially while the stock exchange continued to be closed.
UK Chancellor of the Exchequer George Osborne demanded that government departments find £20 billion in savings to public spending to eliminate the deficit by 2019 to 2020. In the Spending Review 2015 launched Tuesday, Osborne said he plans to eliminate the deficit and run a surplus and ensure Britain lives within its means. The review which will be published November 25 will set out how the government will both invest in priority public services and deliver the £20 billion further savings required to eliminate the budget deficit.
SAP declined after it reiterated its outlook for the full year 2015 after reporting mixed quarterly results. Merck and Bayer both were lower. Fresenius and Fresenius Medical Care declined as did RWE and E.ON. Orange and Alcatel-Lucent were down. Vodafone Group declined after announcing several changes to simplify and streamline its management structure. Royal Mail retreated after the company’s first quarter trading was broadly in line with its expectations. SAB Miller was up on a broker upgrade. Shares of IG Group Holdings sank after Tim Howkins said he would retire from his role as chief executive and a director in October. Novartis was lower after it reported lower earnings for the second quarter, hurt by a strengthening of the US dollar. Akzo Nobel advanced after the company’s second quarter profit increased significantly from the prior year, with profitability in all three business areas despite a challenging market environment. The company said it remains on track to deliver its 2015 targets.
Asia Pacific
Shares were mixed in this region although easing concerns about Greece, encouraging US earnings news and the continued rebound in the Chinese stock market helped offset worries over the recent decline in commodity prices.
The Nikkei was up 0.9% as trading resumed after a three day weekend. The index bounced to a near 18-year high, buoyed by a weak yen and optimism over corporate earnings. The yen retreated against the dollar after minutes from the Bank of Japan’s June 18-19 policy meeting showed most board members were optimistic about the inflation trend improving in the long term.
Mitsui OSK Lines jumped as worries about a further slowdown in China receded. Toshiba shares soared after an independent panel revealed that Toshiba overstated its operating profits by about US$1.2 billion from fiscal 2008 through December 2014, accounting for about 30% of the company’s stated pretax earnings for the period. ANA Holdings and Japan Airlines rallied amid the ongoing oil price slump. Nissan Motor gained ahead of its earnings results due next week.
The Shanghai Composite swung between gains and losses before closing 0.6% higher. Hundreds of firms remain halted from trading. The Hang Seng added 0.5%. Both the S&P/ASX and All Ordinaries both gained 0.3% after minutes of the Reserve Bank of Australia’s July meeting confirmed its mild easing bias. Board members noted that developments in Greece and China coupled with local business investment will guide future interest rate decisions. The Kospi gained 0.5% led by gains in export related stocks after the South Korean won fell to its lowest level in two years against the US dollar amid growing expectations of a US interest rate increase this year. However, the Sensex retreated 0.8% as investors assessed a batch of mixed earnings reports and waited to take for developments in the monsoon session of parliament that began on a stormy note.
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 posts second quarter consumer prices. The Bank of England publishes minutes from its recent policy meeting. In the US, FHFA releases May house prices. June existing home sales will be released.
*Note — all releases are listed in local time.