On 21 July, 2016 – Global stocks were mixed

Disappointing earnings reports dented investor spirits sending stocks lower.
United States
Stocks declined Thursday as disappointing quarterly reports from Intel and from Southwest Airlines stalled momentum in a US corporate earnings season that has been better than feared. Shares of industrial and materials companies had some of the biggest declines. The Dow Jones industrials and S&P both lost 0.4 percent while the Nasdaq was 0.3 percent lower.
General Motors rose after the company said its profit last quarter more than doubled from a year ago. The company also raised its earnings forecast for the year. United Rentals advanced after strong quarterly results. eBay was up after the company reported stronger than expected earnings for the latest quarter. Southwest Airlines stock declined after the company reported revenue and earnings growth that fell short of expectations. Delta and United Continental also retreated. Intel declined after the company reported slower revenue growth than expected. American Express was lower — its revenue was short of predictions. Qualcomm gained after it gave a forecast that beat expectations.
Visa reported a steep drop in quarterly profit, hurt by costs related to the acquisition of Visa Europe and said it would buy back Class A shares worth $5 billion. The company’s net income fell to $412 million or 17 cents per Class A share in the three months ended June 30 from $1.69 billion, or 69 cents per Class A share a year earlier. Excluding costs related to Visa Europe, the company reported an adjusted profit of $1.6 billion or 69 cents per share.
Starbucks said global sales at company-owned cafes open at least 13 months in the fiscal third quarter ended June 26 rose 4 percent from the year-ago period. That was well short of the overall same-cafe sales gain of 5.6 percent that had been expected.
AT&T reported a 22.7 percent increase in quarterly operating revenue as it added more television subscribers, helped by its acquisition of DirecTV. The net income attributable to AT&T rose to $3.41 billion in the second quarter ended June 30 from $3.08 billion a year earlier. On a per share basis, it fell to 55 cents from 59 cents. Total operating revenue rose to $40.52 billion from $33.02 billion.
Weekly jobless claims were down 1,000 to 253,000. The July Philadelphia Fed general business conditions index slumped to a reading of minus 2.9 from plus 4.7 in June. June existing home sales were up 1.1 percent on the month and 3.0 percent from a year ago.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$12.25 to US$1,082.25. Copper futures were up 0.3 percent to US$2.26. WTI spot crude was up 29 US cents to US$44.94. Dated Brent spot crude was down US$1.12 to US$46.05. The US dollar was up against the pound and the Canadian dollar. However, it declined against the yen, Swiss franc and Australian dollar. It was virtually unchanged against the euro. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was unchanged at 2.30 percent while the yield on the 10 year note slipped 2 basis points to 1.56 percent.
Europe
Stocks were mixed Thursday in choppy trading. Travel stocks were under pressure after some disappointing news from both easyJet and Lufthansa. The main focus however, was the European Central Bank’s policy announcement. The FTSE retreated 0.4 percent, the SMI slipped 0.2 percent and the CAC was 0.1 percent lower. The DAX however, edged up 0.1 percent.
The European Central Bank left its monetary policy unchanged in its first post-Brexit governing council meeting. The governing council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases. Further, the bank confirmed that the monthly asset purchases of €80 billion are intended to run until the end of March 2017 or beyond if necessary and in any case, until it sees a sustained adjustment in the path of inflation consistent with its inflation aim. According to ECB president Mario Draghi, the governing council will monitor economic and financial market developments very closely and aim to safeguard the pass-through of its accommodative monetary policy to the real economy.
Deutsche Lufthansa was down after cutting its 2016 profit forecast due to repeated terrorist attacks in continental Europe. Daimler advanced after reporting a 7 percent rise in second-quarter net income and reaffirming its full-year outlook. In Paris, advertising and communications company Publicis Groupe climbed after posting a 0.9 percent increase in second quarter revenue on a reported basis. In London, easyJet shares sank after it reported lower quarterly revenue and declined to give guidance on its full-year profits due to uncertainty caused by the EU vote, the recent terror attack in Nice and the failed coup in Turkey. British Airways owner International Consolidated Airlines Group declined along with Ryanair Holdings. Travel service providers TUI and Thomas Cook were lower. Real estate investment trust Land Securities Group declined after warning of subdued demand for commercial property. SABMiller gained after US antitrust officials approved AB InBev’s $108 billion takeover of the London-based rival.
June British retail sales declined more than expected. Retail sales volume including auto fuel fell 0.9 percent on the month, offsetting a 0.9 percent rise in May.
Asia Pacific
Shares were mixed Thursday as a weakening yen combined with higher oil prices, upbeat corporate earnings and the looming European Central Bank meeting hovering over investors.
The Nikkei was up 0.8 percent after the yen weakened and reports that the government is arranging to compile a ¥20 trillion stimulus package, about double its previous plan. Exporters Honda Motor, Hitachi and Panasonic climbed. Fast Retailing, Fanuc and Inpex advanced. DeNA gained after it joined hands with Yamato Transport to start trials on a delivery service that will utilize self-driving vehicles.
Both the S&P/ASX and All Ordinaries were 0.4 percent higher. Investors shrugged off NAB’s latest quarterly business survey, which showed Australian business confidence weakened in the second quarter. The big four banks were higher while hearing implant maker Cochlear and CSL advanced. Retailer Wesfarmers and Woolworths gained. Qube Holdings jumped after the Australian Competition and Consumer Commission said it would not oppose the proposed acquisition of Asciano by a consortium led by the company and Brookfield Infrastructure Partners.
The Shanghai Composite added 0.4 percent while the Hang Seng was up 0.5 percent. The Kospi slipped 0.2 percent as investors exercised caution ahead of the ECB meeting later in the day and next week’s Bank of Japan and Federal Reserve meetings. The Sensex was 0.7 percent lower as investors waited for the European Central Bank meeting later in the day.
Looking forward
Flash July PMIs will be released for Japan, France, Germany and the US. Special UK flash indices will also be reported. Canada posts May retail sales and June consumer price index. G20 finance ministers and central bankers meet in China over the weekend.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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