On 08 February, 2017 – Earnings in focus

With little economic news, shares were mixed.
United States
US stocks were mixed in lackluster trading. The Dow Jones industrials retreated 0.2 percent while the S&P was up 0.1 percent and the Nasdaq also added 0.1 percent to close at a new record high. It was quiet on the economic data front. Ongoing political uncertainty in both Europe and the US may also have kept some traders on the sidelines.
Real estate companies and other stocks that pay large dividends were mostly higher as bond yields fell. Banks and other financial companies lagged the most. Investors were focused on the latest slate of company earnings news. Akamai Technologies declined after the cloud services company’s latest guidance disappointed investors. Gilead Sciences dropped after the company forecast disappointing sales of its hepatitis C drugs. Zillow Group retreated after the online real estate information company posted quarterly results that included a tally of monthly unique users that fell short of expectations.
GrubHub was down after the online food ordering service said its orders slowed in the fourth quarter. It also issued guidance that fell shy of what was expected. Myriad Genetics advanced after the diagnostic test maker said sales of hereditary cancer tests have begun rising again, driving revenue to the highest level in three years. Panera Bread climbed after it announced solid fourth-quarter results and gave a better-than-expected forecast for sales at older locations. Microchip Technology climbed after its fiscal third-quarter results and current quarter outlook exceeded forecasts. Allergan was higher after the Botox maker turned in better-than-expected quarterly results. Goldman Sachs and JP Morgan declined. Bank stocks are sensitive to interest rate changes and US Treasury yields fell to their lowest levels in multiple weeks.
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 1.3 percent to US$2.67. WTI spot crude was up 23 US cents to US$52.40. Dated Brent spot crude was up11 US cents to US$55.16. The US dollar was down against the pound, Swiss franc and the Canadian and Australian dollars. It was virtually unchanged against the euro. The Dollar Index was down 0.1 percent. The yield on US Treasury 30 year bond was down 7 basis points to 2.95 percent while the yield on the 10 year note was down 6 basis points to 2.22 percent.
Europe
Stocks were mixed as investors continued to focus on corporate earnings reports. The FTSE, CAC and DAX all were up 0.5 percent while the SMI slipped 0.2 percent. Greece’s bailout along with worries about political risks in Europe and the United States persisted Wednesday.
According to the Bank of France, the French economy will expand at a slightly slower pace in the first three months of the year when compared with the previous quarter. First quarter gross domestic product is expected to grow 0.3 percent.
Commerzbank and Deutsche Bank retreated. Vinci climbed after the firm forecast higher revenue and profits this year after reporting an increase in net income for fiscal year 2016. Sanofi advanced after it said that it has worked pretty hard to address FDA concerns over manufacturing deficiencies at its Le Trait facility. Air France-KLM jumped after reporting a 5.3 percent increase in passenger traffic for January. Hermes declined despite posting higher fourth-quarter sales, driven mainly by its leather goods arm.
In London, Rio Tinto was lower after the mining giant proposed to pay a higher than expected dividend and unveiled a share buyback program after reporting the first gain in annual profit since 2013. BHP Billiton was lower after the company asked unions to maintain minimum services at Escondida copper mine after wage talks failed to produce an agreement. Tullow Oil slumped after posting a $597 million full-year loss after write-offs and impairments. Royal Dutch Shell has submitted a plan to the British government for dismantling its Brent North Sea production platforms, a turning point for the UK oil industry as operators face the huge challenge of gradually abandoning depleted fields after 40 years of production.
Shire was down a day after the US Federal Trade Commission filed a civil action against one of its subsidiaries. Hargreaves Lansdown declined after the investment firm reported a 21 percent rise in first-half pretax profit, but net new business inflows were down 16 percent on the year. Aberdeen Asset Management gained on a broker upgrade. AP Moller-Maersk dropped after it reported a fiscal 2016 loss from continuing operations of $1.9 billion compared to profit of $925 million prior year. Persimmon, Taylor Wimpey and Barratt Developments rallied.
Asia Pacific
Shares were mixed — solid earnings, a pause in the yen rally and signs that the Chinese government is extending steps to defuse potential credit bubbles helped offset investor concerns over political risks in Europe and the United States.
The Shanghai Composite added 0.4 percent led by financial shares even though weak forex reserves data highlighted the challenges faced by Beijing in curbing capital outflows. While foreign exchange reserves dropped below $3 trillion in January for the first time in almost six years, the decline in reserves was much smaller than in the same period of last year and December. The Hang Seng was up 0.7 percent.
Both the Nikkei and Topix were up 0.5 percent in choppy trading. Expectations surrounding Prime Minister Shinzo Abe’s visit to the United States on Thursday offered some support to shares. Asahi Glass rallied after the company announced a share buyback. Tomy advanced after raising its full-year profit forecasts. Inpex and JX Holdings dropped. Fujitsu retreated after its biggest shareholder, Fuji Electric, unveiled plans to unload over 168.89 million shares in the company.
Both the S&P/ASX and All Ordinaries gained 0.5 percent after a slew of positive earnings updates helped investors shrug off a fall in oil prices and uncertainty ahead of several impending European elections. The big four banks rose. Rio Tinto gained before unveiling its full-year earnings results after the market close. BHP Billiton and Fortescue Metals Group retreated.
The Kospi was 0.5 percent lower on growing uncertainties surrounding US policies and unsettled politics in Europe. The Sensex was down 0.2 percent after the Reserve Bank of India left its policy interest rate unchanged at 6.25 percent. Some market participants were expecting a 25 basis point cut amid falling inflation and the government’s resolve to adhere to fiscal prudence in the Budget. The repo rate was last reduced by 25 basis points in October at the first meeting chaired by Governor Urjit Patel and before the announcement of demonetization.
Looking Forward
Japan posts December machine orders. Germany releases December merchandise trade balance. In the US, weekly jobless claims will be posted.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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