On 19 July, 2016 – Stock indices mixed on Tuesday

Investors paused as they waited for key earnings reports.
United States
Stocks were mostly lower Tuesday. However, the Dow Jones industrials managed to edge up 0.1 percent while the S&P and Nasdaq were down 0.1 percent and 0.4 percent respectively. There were disappointing earnings reports along with a downgrade to global growth from the International Monetary Fund. Corporate earnings dominated trading.
Netflix tumbled after it added fewer subscribers last quarter than it had expected, which it attributed to customers leaving before a rate freeze on their accounts expired. Health insurers were lower after it was reported that United States antitrust officials might move to block two big deals in the industry. Anthem has agreed to buy Cigna, and Aetna hopes to absorb Humana. Philip Morris International was lower after the company reported weaker quarterly results than expected. Johnson & Johnson advanced after it posted stronger than anticipated earnings and raised its forecast for profits for the full year.
Goldman Sachs beat estimates for second-quarter profits, posting an 88 percent rise in earnings per share after strong performances from mergers and acquisitions and debt-underwriting. Earnings per share were $3.72 for the period, up from $1.98 per share a year earlier.
Microsoft reported a 2.1 percent increase in quarterly adjusted revenue as growth in its cloud business helped to offset weakness in the personal computer market. The company’s posted net income of $3.12 billion or 39 cents per share for the fourth quarter ended June 30 compared with a loss of $3.2 billion or 40 cents per share a year earlier. Adjusted revenue rose to $22.6 billion from $22.2 billion.
June housing starts advanced 4.8 percent on the month with especially high starts in the Northeast and West. The International Monetary Fund cut its global growth forecasts for the next two years, citing uncertainty over Britain’s looming exit from the European Union.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$3.80 to US$1,330.90. Copper futures were up 1.0 percent to US$2.15. WTI spot crude was down 61 US cents to US$44.63. Dated Brent spot crude was down 27 US cents to US$46.69. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.7 percent. The yield on US Treasury 30 year bond was down 3 basis points to 2.27 percent while the yield on the 10 year note was down 4 basis points to 1.59 percent.
Europe
Most stock indices retreated Tuesday, pulling back from three week highs as investors turned more cautious. German economic sentiment and Eurozone construction output were both weaker than anticipated and the IMF lowered its global economic growth outlook for the year due to the potential impact from the Brexit. The FTSE was virtually unchanged (up 1.95 points). The CAC, and SMI were down 0.6 percent and the DAX lost 0.8 percent.
The International Monetary Fund lowered its global economic growth outlook for this year and next, warning that the surprise Brexit vote has triggered a wave of uncertainty amid already fragile business and consumer confidence. The global growth forecast for this year was slashed to 3.1 percent from 3.2 percent projected in April while the outlook for next year was lowered to 3.4 percent from 3.5 percent. Euro area growth was trimmed to 1.6 percent for 2016 and the forecast for 2017 was cut to 1.4 percent. UK economic growth was downgraded to 1.7 percent and 1.3 percent for this year and next respectively.
In Frankfurt, online apparel retailer Zalando soared after lifting its full year profit guidance. Evotec jumped — the drug discovery alliance and development partnership company lifted its FY16 financial guidance. Banks including Deutsche Bank, Commerzbank, Société Générale, Credit Agricole and BNP Paribas retreated. In London, Rio Tinto was lower after it missed expectations for second quarter iron ore production. Drug major Novartis slipped in Zurich after reporting a drop in its second quarter profit, largely because of new generic competition for its top cancer drug. Fiat Chrysler Automobiles, which is under investigation by US authorities for inflated sales reports, was down in Milan.
Eurozone May construction output was down a seasonally adjusted 0.5 percent on the month after sliding 0.3 percent in April. ZEW July German economic sentiment plunged to a reading of minus 6.8 from plus 19.2 in June — a level last seen in late 2012 and reflecting the “Brexit” vote and the consequent uncertainty for the economy. UK June consumer price index climbed 0.5 percent from the same month a year ago.
Asia Pacific
Stocks indices in Asia Pacific were mixed. Oil prices declined overnight on concerns of a crude and refined fuel glut.
The Shanghai Composite was down 0.2 percent. Shares declined on fears of possible capital outflows, a day after the yuan slipped below the psychologically important level of 6.7 to the US dollar for the first time in more than five years. The spectre of a slowing housing market and doubts over the nature of economic growth in the county also dented investor sentiment. The Hang Seng was 0.6 percent lower.
The Nikkei added 1.4 percent as the yen touched a 3-1/2 week low before rebounding in late Asian trading. Nintendo shares jumped to extend its rally fueled by the phenomenal success of the Pokemon GO mobile game. SoftBank dropped after the heavily-indebted company said it would buy UK-based chipmaker ARM Holdings for $32 billion.
The S&P/ASX and All Ordinaries both were 0.1 percent lower. Rio Tinto was lower after releasing its second quarter production results. BHP Billiton, which will unveil its production figures on Wednesday, and South32 both declined. Banks were mixed. Retailers Woolworths and Wesfarmers both advanced.
The Kospi was down 0.2 percent as some institutional investors took profits before the European Central Bank’s meeting on Thursday. The Sensex edged up 0.1 percent.
Looking forward
Germany posts June producer price index. The UK releases its labour market report. The Eurozone reports its July flash EC consumer confidence. The US releases weekly EIA petroleum status report.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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