On 06 August, 2015 – European markets slid on mixed earnings reports and weak oil prices

Shares were mostly lower thanks to disappointing earnings and concerns about the possibility of higher US interest rates. Investors were waiting for Friday’s US employment report so they can assess whether the data dependent Federal Reserve is closer to begin increasing its fed funds rate.
United States
Big media companies led the stock market lower Thursday as investors fretted over fading revenue from cable television. Viacom and 21st Century Fox were among the hardest hit. The Dow Jones industrials were down 0.7%, the S&P slid 0.8% and the Nasdaq retreated 1.6%.
The Walt Disney Company and other media giants sank after signs that more people are ditching cable TV. Viacom, the company behind Comedy Central and Nickelodeon, reported on Thursday that its sales and profit fell in the most recent quarter. 21st Century Fox, which owns MTV, also reported that television revenue fell. Both companies were down on the day. Keurig Green Mountain plunged after the maker of single-serve coffee machines said revenue from coffee pods and brewers both declined in the latest quarter. Mondelez International, which makes Oreo cookies and Cadbury chocolate, jumped after activist investor William A. Ackman took a US$5.5 billion stake in the company.
The British pound fell sharply after the Bank of England voted to keep its key interest rate at a record low. Only one out of eight on its policy committee voted for an increase, a smaller than expected minority that suggests the bank may take longer to start raising rates, a prospect that tends to weigh on a currency but help stocks.
Gold at the afternoon London fixing was up US$4.65 to US$1,189.75. Copper futures were down 0.2% to US$2.34. WTI spot crude was down 45 US cents to US$44.70. Dated Brent spot crude was down 1 US cent to US$49.58. The US dollar was up against the pound, Swiss franc and the Australian dollar. However, it declined against the euro, yen and the Canadian dollar. The Dollar Index was virtually down 0.2%. The yield on US Treasury 30 year bond was down 4 basis points to 2.90% while the yield on the 10 year note slipped 4 basis points to 2.22%.
Europe
Stocks retreated Thursday thanks to a mixed bag of corporate earnings reports and weakness in oil prices. Investors are waiting for the release of the US employment report for July which will be released Friday morning. A strong report would likely add to speculation that the Federal Reserve will raise rates in September, while a weak report could provide ammunition for more dovish central bankers to argue that the rate increase should be delayed. The FTSE and CAC each slipped 0.1% while the DAX declined 0.4% and the SMI retreated 0.7%. Greece’s Athex Composite Index was up 3.7%, after declining for three days and after reopening Monday following a five-week hiatus.
The Bank of England kept its key rate unchanged and its asset purchase program ceiling at £375 billion. The vote was 8 to 1 to maintain its interest rate at 0.5% where it has been since March 2009. The BoE for the first time released the minutes at the same time as their policy decision Thursday. The Bank also simultaneously published its Quarterly Inflation Report on what was dubbed “Super Thursday”.
Deutsche Telekom declined after posting muted growth in second-quarter net profit. Merck KgaA finished lower after confirming its 2015 outlook. Adidas retreated after the sports goods giant reported 1% growth in second quarter earnings and unveiled plans to shed its struggling TaylorMade golf business. Metro increased after the retailer reported turnaround results for the third quarter. Deutsche Post dropped after the company reported that its second quarter consolidated net profit declined by 29.3% to €326 million from €461 million in the prior year. Munich Re advanced after its second quarter basic earnings per share rose to €6.42 from €4.39 last year. Both Peugeot and Renault were lower on the day.
Rio Tinto advanced after it reduced its capital expenditure forecast for 2015 and 2016 after reporting a 43% fall in half-year profit. Aggreko dropped after its profit before tax for the six months ended June 30, 2015 decreased 21% to £102 million from £130 million in the prior-year period. Aviva was up after it reported a 9% increase in first half profit. Old Mutual gained after its adjusted operating earnings per share for the first half of the year came in at 10.3 pence compared to 8.8 pence last year. Zurich Insurance retreated after its first half attributable net income fell 3% to US$2.059 billion from US$2.123 billion in the previous year.
June German manufacturing new orders jumped 2.0% driven by robust foreign demand from abroad, thanks to a weaker euro. This very volatile series retreated 0.2% in May. UK industrial production declined unexpectedly on a slump in oil and gas extraction in June, while manufacturing output recovered from the prior month.
Asia Pacific
Stocks were mostly lower Thursday. While a weaker yen and earnings optimism offered support to Japanese equities, Indian shares edged up modestly on the back of continuous flow of money from abroad as oil prices continued to ease and fears of poor monsoon rains affecting agriculture growth receded. The markets elsewhere succumbed to selling pressure as the looming rate increase buoyed the dollar ahead of Friday’s US employment report.
Mainland Chinese shares extended losses despite continuous policy support from policymakers to stabilize markets. The Shanghai Composite was down 0.9%, extending losses from the previous session. The Hang Seng retreated 0.6% as caution crept in ahead of the release of Chinese trade figures due over the weekend.
A weaker yen helped Japanese shares buck the regional downward trend. However, gains were capped by worries about China and lingering uncertainty over when the Federal Reserve will begin raising rates. The Nikkei average added 0.2%. The safe-haven yen hovered near a two month low against the dollar on optimism over the US economy after a gauge of service sector growth rose to its highest level in 10 years. Meiji Holdings shares soared after the dairy products maker posted strong first-quarter earnings. Mobile operator NTT DoCoMo rallied on news that it will work with Intel and Qualcomm for developing 5G technologies. Takata climbed before unveiling its first quarter results after the market close. Nippon Telegraph and Telephone jumped after announcing a share buyback. Automakers including Toyota, Mazda and Honda Motor advanced.
The S&P/ASX was down 1.1% while the broader All Ordinaries index closed down 1.0%. ANZ shares were placed in a trading halt pending an announcement by the bank in relation to a US$3 billion capital raising. The other three big banks retreated even as weak data spurred speculation the RBA may cut rates later this year. Australia’s July unemployment rate rose to its highest level since January reflecting a sharp increase in the number of people looking for work. The jobless rate climbed to 6.3% from 6.1% in June. However, the economy did add 38,500 jobs with full-time employment up only 12,400 jobs while part-time employment was up 26,100. The Kospi retreated 0.8% while the Sensex added 0.3%.
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*
Friday — Bank of Japan announces its monetary policy decision. Both Germany and France post June industrial production and merchandise trade balance. Canada releases July labour force survey. The US reports July employment situation and June consumer credit.
Over the weekend — China posts July consumer, and producer price indices along with the July merchandise trade balance.
*Note — all releases are listed in local time.