On 20 October, 2016 – Global stocks mixed Thursday

The ECB boosted shares in Europe while earnings weighed on US stock indices.
United States
Stocks retreated thanks to disappointing earnings reports. Crude prices declined. Telecom stocks fell, while health care stocks mostly rose. The Dow Jones industrials were down 0.2 percent while Nasdaq and the S&P lost 0.1 percent.
Verizon Communications slid after the company posted weak quarterly revenue as it added far fewer wireless and internet service subscribers than a year ago. AT&T also was lower. Union Pacific stock was down after the company said weak demand for consumer goods had reduced the volume of its freight and coal shipments. Dunkin’ Brands Group was down after the chain’s latest quarterly revenue snapshot fell short of expectations. The company also cut its forecast for sales growth. American Express surged a day after the company reported better than anticipated quarterly results and raised its annual outlook. Travelers declined after reporting a 24 percent drop in operating earnings after an unusually strong year-earlier quarter.
American Airlines said that its revenues fell 1.1 percent in the third quarter from the same period in 2015 to $10.59 billion, higher than anticipated. Revenue per available seat miles, a closely watched metric in the airline industry, skidded 2.2 percent to 14.73 cents. American said that the fall was due to “competitive capacity growth, continued macroeconomic softness outside of the United States and foreign currency weakness.” Net income dropped to $737 million from $1.7 billion, due to a tax-related item and a 5.2 percent increase in operating expenses driven by a jump in salaries and benefits. Excluding certain items, profits per share were $1.76.
PayPal Holdings reported an 18.1 percent increase in quarterly revenue, helped by a surge in payment processing volumes and customer additions. PayPal, spun off from e-commerce company eBay last year, said its revenue rose to $2.67 billion in the third quarter ended September 30, from $2.26 billion a year earlier. Net income rose to $323 million or 27 cents per share from $301 million or 25 cents per share.
Microsoft reported a 3.1 percent rise in adjusted revenue as growth in its cloud business helped offset weakness in the personal computer market. Adjusted revenue rose to $22.33 billion from $21.66 billion in its first quarter ended September 30. Net income fell to $4.69 billion or 60 cents per share from $4.90 billion or 61 cents per share a year earlier.
Weekly jobless applications for unemployment climbed to the highest level in five weeks. Existing home sales were up 3.2 percent from August to a seasonally adjusted annualized rate of 5.47 million, the strongest pace since June.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.60 to US$1,271.65. Copper futures were down 0.4 percent to US$2.10. WTI spot crude was down US$1.17 to US$50.43. Dated Brent spot crude was down US$1.28 to US$51.39. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.6 percent. The yield on US Treasury 30 year bond was unchanged at 2.50 percent while the yield on the 10 year note was up 1 basis point to 1.75 percent.
Europe
Stocks were mostly higher Thursday after the European Central Bank’s monetary policy announcement. The FTSE edged up 0.1 percent, the CAC gained 0.4 percent, the DAX advanced 0.5 percent but the SMI retreated 0.3 percent.
The European Central Bank left its key interest rates unchanged and retained its asset purchases level. The ECB held the refi rate unchanged at a record low zero percent, the deposit rate at minus 0.40 percent and the marginal lending facility rate at 0.25 percent. The three rates were previously lowered in March. The bank also confirmed that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond if necessary. ECB President Mario Draghi ruled out any discussion of ‘tapering’ among governing council members but added that it was unlikely that asset purchases would have an abrupt end, signaling that they may be extended beyond March 2017.
Lufthansa surged after raising its 2016 profit forecast. GEA plunged after cutting its profit guidance. Publicis dropped after the company reported worse than expected third quarter results after the loss of a number of big accounts in the US last year ate into its earnings. Third quarter revenue was €2.3 billion, down 0.4 per cent at actual exchange rates. On an organic basis, which tends to be the measure watched by analysts as it offers a picture of underlying growth, revenue was up 0.2 percent compared to growth of 2.7 percent in the previous three months.
In London, HSBC Holdings finished lower. The bank said it would pull out of Monaco to reduce its financial and reputational risks. Barclays climbed 3.21 percent after its CEO cast a positive light on the progress he’s making in his turnaround program. Glencore declined after it agreed to sell its Glencore Rail coal haulage business in the New South Wales Hunter Valley for A$1.14 billion. Builder Keller and engineering firm Senior tumbled after issuing profit warnings. Nestle was lower in Zurich after the foods giant trimmed its organic sales growth view for fiscal 2016, citing the current softer environment.
Asia Pacific
Asian stocks were mixed Thursday after oil prices retreated after sharp gains overnight, a weaker yen and hopes that the European Central Bank will extend its asset purchase program supported underlying sentiment.
The Nikkei and Topix were up 1.4 percent and 1.0 percent respectively. Exporters including Mazda Motor, Toyota, Honda, Hitachi and Toshiba were higher. Fast Retailing and SoftBank also advanced. Nintendo gained before unveiling a preview trailer on its upcoming NX console. Sharp jumped on a Nikkei report that Foxconn, which holds a majority stake in the Japanese display manufacturer, is considering expanding into the chip business.
Both the S&P/ASX and All Ordinaries edged up 0.1 percent. The September labour force survey indicated that employment unexpectedly declined by 9,800 but unemployment slipped to 5.6 percent. Rio Tinto gained but South32 retreated. Fortescue dropped after releasing their quarterly production reports. BHP Billiton advanced. Gold miners Regis Resources, Norther Star, Evolution Mining and Newcrest Mining climbed after gold prices hit a two week high overnight, boosted by a weaker dollar.
The Shanghai Composite was virtually unchanged (down 0.26 point) while the Hang Seng added 0.3 percent. The Kospi was virtually unchanged (down 0.34 point) as foreign investors slowed their purchases ahead of the ECB meeting. The Sensex advanced 0.5 percent.
Looking Forward
The Eurozone posts EC consumer confidence flash for October. Canada releases August retail sales and September consumer price index.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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