On 22 July, 2015 – European markets slid on weak corporate earnings

Stocks were mostly lower thanks to disappointing earnings from the US technology sector.
United States
Weak showings from Apple, Microsoft and other companies pulled stocks lower Wednesday. The Dow Jones industrials were down 0.4%, the S&P slipped 0.2% and the Nasdaq lost 0.7%.
Apple slumped after the company gave a cautious outlook for the current quarter and did not provide much detail on how its new smartwatch was doing. Apple’s forecast sparked a selloff in the iPhone maker’s suppliers including Cirrus Logic, Skyworks Solutions, Avago Technologies and NXP Semiconductors. European chip supplier Dialog Semiconductor and Infineon Technologies also retreated. Microsoft reported a hefty quarterly loss late Tuesday reflecting an expense of US$8.4 billion related to its purchase of the Nokia phone business over a year ago. Yahoo declined after it forecast lower than expected revenue for the current quarter as it struggles to revive its core online advertising business.
Chipotle Mexican Grill climbed after the Mexican-food chain posted earnings that beat forecasts. Whirlpool jumped on news that the appliance maker’s second quarter earnings beat expectations. American Express reported a 5% fall in quarterly profit as a stronger dollar reduced revenue from markets outside the United States. The company’s net income attributable to common shareholders declined to US$1.44 billion or US$1.42 per share in the second quarter ended June 30 from US$1.52 billion or US$1.43 per share a year earlier. Total revenue net of interest expense fell 4% to US$8.28 billion. Coca-Cola said profit jumped 20% in its second quarter as the beverage giant posted volume growth. Results topped expectations. Boeing said sales rose 11% in the June quarter exceeding expectations.
The National Association of Realtors said that sales of previously occupied homes climbed 3.2% in June to a seasonally adjusted annual rate of 5.49 million — the highest pace in more than eight years. Homebuilders advanced on the news.
Gold at the afternoon London fixing dropped US$17.00 to US$1,088.60. Copper futures were down 1.9% to US$2.43. WTI spot crude was down US$1.71 to US$49.15. Dated Brent spot crude was down US$1.06 to US$55.96. The US dollar was up against the yen, euro, Swiss franc and the Canadian and Australian dollars. However, it declined against the pound. The Dollar Index was up 0.3%. The yield on US Treasury 30 year bond was down 4 basis points to 3.04% while the yield on the 10 year note slipped 1 basis point to 2.33%.
Europe
Stocks retreated for a second day when investors reacted negatively to some weak earnings from large US technology companies. Oil and mining stocks also were down. The FTSE dropped 1.5%, the CAC was down 0.5%, the DAX declined 0.7% and the SMI was 1.0% weaker. Among the technology companies that disappointed were Apple, Microsoft and Yahoo. There was little new economic information to sway investors.
The Bank of England unanimously decided to keep the monetary policy unchanged at the meeting held earlier this month, but more monetary policy committee members moved closer to vote for a rate increase. The MPC voted to retain its key rate at a record low 0.50% and asset purchase program at £375 billion.
K+S declined on reports that it has rejected a fresh approach from Canadian mineral miner Potash Corp. of Saskatchewan to restart merger talks. Dialog Semiconductor and Infineon Technologies tumbled. Automakers Volkswagen, BMW and Daimler retreated. Total and Technip slid. ARM Holdings declined after it posted a 28% increase in pre-tax profits for the first half of the year, benefitting from higher revenues mainly from processor royalty revenues. EasyJet climbed after the low-cost carrier reported better than expected quarterly revenues and forecast annual profit growth of about 14%. Mining stocks were under pressure due to falling prices for precious metals. Rio Tinto, Anglo American, Glencore, Antofagasta and BHP Billiton declined. The BHP Billiton has again forecast increased output over the next 12 months despite a slump in iron ore prices. Gold producers also came under pressure with Fresnillo retreating after gold prices hit a five year trough in renewed selling after their dramatic slide earlier this week.
Asia Pacific
Stocks were mostly lower as weak commodity prices, disappointing earnings from US tech giants and lingering uncertainty over when US interest rates will rise kept investors on edge ahead of next week’s FOMC meeting.
The Nikkei succumbed to profit taking after US stocks fell overnight on earnings concerns. The Nikkei declined 1.2% after rising for six consecutive days. Exporters were dragged down by a stronger yen after Bank of Japan Governor Haruhiko Kuroda dismissed the chances of further monetary easing. Toyota Motor, Nikon, Mazda Motor, Sony, Canon, Fanuc, Panasonic and Kyocera declined. Toshiba dropped after the company said that it had completed sale of its entire stake in Finnish elevator and escalator maker Kone Oyj for €864.7 million. Apple component makers declined after the company missed some targets for iPhone sales. Murata Manufacturing and TDK were down. Tokyo Electron, which manufactures chip-making equipment and Advantest dropped on worries over slowing demand for PC chips. Shares of Mitsui Chemicals soared on a Nikkei report that the company’s operating profit for the half year ended September will likely jump 80% to about ¥33 billion.
Australian shares fell sharply as investors paused for profit taking after six straight days of gains. The S&P/ASX retreated 1.6% while the broader All Ordinaries index lost 1.5%. BHP Billiton dropped after it forecast increased output over the next 12 months despite a slump in iron ore prices. Rival Rio Tinto declined while Fortescue Metals Group advanced. Second quarter consumer prices were up 1.5% on the year, well below the Reserve Bank of Australia’s 2% to 3% target range but up from 1.3% in the previous three months. The Australian dollar shed initial gains after Reserve Bank of Australia Governor Glenn Steven signaled the possibility of a further rate cut this year in a speech in Sydney. Stevens said that an interest rate cut is still possible, but evidence of further economic weakness will not automatically trigger such a move.
Chinese stocks swung between gains and losses before ending modestly higher at the close amid reports that China’s central bank and finance ministry will inject billions of dollars into two of the country’s policy banks. The Shanghai Composite closed up 0.2% while the Hang Seng slid 1.0%. The Kospi dropped 0.9% on concerns over the upcoming second quarter earnings season and hawkish comments from Federal Reserve officials. The Sensex jumped 1.1% amid hopes that the “very important” GST Bill will get passed in the monsoon session of Parliament.
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 June merchandise trade. UK releases June retail sales. EC consumer confidence flash for July is released. In the US, June leading indicators will be released along with weekly jobless claims, money supply and fed balance sheet.
*Note — all releases are listed in local time.