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Global Round Ups  - 25.07.2017

On 24 July, 2017 - A deluge of earnings reports were high on investors’ agendas

Global stocks were mixed as investors also waited for the FOMC announcement.

United States

US stocks were mixed Monday showing a lack of direction as investors waited for earnings. The S&P virtually unchanged (down 2.63 points) and the Dow Jones industrials declined 0.3 percent. However, the Nasdaq closed at a new record high, gaining 0.4 percent. Traders seemed reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday. While the Fed is widely expected to leave its fed funds interest rate unchanged, traders will pay close attention to the accompanying statement.

June existing home sales tumbled 1.8 percent to an annualized rate of 5.52 million and down from 5.62 million in May.

Hasbro’s quarterly results disappointed investors with sales growth that fell short of expectations. Both Hasbro and Mattel declined. Johnson & Johnson ended lower. J&J faces discounted competition to its big-selling rheumatoid arthritis drug. Hibbett Sports tumbled after the sporting goods retailer's second quarter sales warnings. Dick's Sporting, Foot Locker and Finish Line also declined. WebMD Health jumped after KKR agreed to buy WebMD in a deal valued at about $2.8 billion.

Halliburton reported a profit in its second quarter, compared to a hefty loss a year ago boosted mainly by the absence of a one-time merger termination charge as well as strong demand in North America. For the second quarter, net income attributable to the company was $28 million or $0.03 per share compared to last year's loss of $3.21 billion or $3.73 per share. The prior year's result included a $3.5 billion merger termination fee related to the Baker Hughes deal.

Alphabet reported a 27.7 percent drop in quarterly profit as the company recorded a previously announced charge related to a record $2.7 billion fine imposed on its Google unit by the EU. EU antitrust regulators last month hit Google with a record €2.4-billion fine. On a consolidated basis, revenue rose about 21 percent to $26.01 billion in second quarter ended June 30.

Oil prices rose as the Organization of the Petroleum Exporting Countries (OPEC) continued to grapple with the growing challenges to removing what it sees as a global oversupply of oil from the market. Saudi Arabian oil minister Khalid al-Falih said the country would limit its oil exports and added that he wanted other countries to follow suit. Despite a deal struck last year to take out almost 1.8 million barrels of crude oil from the global market, prices remain stubbornly low.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$7.00 to US$1,255.55. Copper futures were up 0.7 percent to US$2.74. WTI spot crude was up 63 US cents to US$46.40. Dated Brent spot crude was up 59 US cents to US$48.65. The US dollar was up against the euroland the Swiss franc. The currency declined against the pound and the Canadian and Australian dollars and was unchanged against the yen. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond was up 2 basis points to 2.83 percent while the yield on the 10 year note was up 1 basis point to 2.25 percent.

Europe

Stocks were mixed in Europe Monday. Both airline shares and automakers were under selling pressure. The FTSE dropped 1.0 percent, the DAX slid 0.3 percent and the SMI was down 0.5 percent. However, the CAC edged up 0.2 percent. Brexit worries, the recent strength of the euro and weak Eurozone economic data indicating slower growth also dented investor sentiment before the Federal Reserve’s FOMC meeting on Tuesday and Wednesday.

EU antitrust regulators said they are investigating allegations of a cartel among a group of German carmakers. Automakers BMW, Daimler and Volkswagen tumbled after reports that EU regulators are studying reports of cartel among German carmakers. Ryanair declined after the budget airline said it expects the pricing environment to remain very competitive in the second half of the year. International Airlines Group and easyJet also retreated.

Gemalto plunged after the digital security company announced a goodwill impairment charge of around €420 million. Philips Electronics rallied in Amsterdam after the company reported a rise in second quarter net income from continuing operations on higher sales and orders. Julius Baer jumped on reporting a 6 percent increase in assets under management in the first six months of 2017. UBS and Credit Suisse also were higher. LafargeHolcim and Sika edged higher. Nestlé, Novartis and Roche retreated.

Flash PMI data for July indicated that the Eurozone economy was on solid footing even through the pace of growth slowed for the second successive month. The composite output index fell to a 6-month low of 55.8 in July from 56.3 in June. The pound advanced against the euro despite an IMF cut to its UK GDP growth forecast and data showing that the squeeze on UK household finances intensified in July.

The International Monetary Fund has cut its growth forecast for the UK economy in 2017, its first downgrade since the immediate aftermath of the Brexit vote last year. The IMF said annual GDP would expand 1.7 percent this year, compared to a forecast of 2 percent growth made in April. The 2018 forecast was unchanged at 1.5 percent.

Asia Pacific

Asian stocks were mixed Monday thanks to a firmer yen, Friday's oil sell-off and US political concerns weighing on markets. Investors were also waiting for the Federal Reserve’s policy announcement Wednesday afternoon (US ET). Oil prices were slightly higher in Asia prior to the joint OPEC and non-OPEC ministerial meeting later in the global market day to discuss the issue of rising output in Nigeria and Libya.

The Shanghai Composite added 0.4 percent after the International Monetary Fund kept its growth forecasts for the world economy unchanged for this year and next, but revised growth expectations up for the Eurozone and China. The Hang Seng advanced 0.5 percent on expectations that China will increase fiscal spending to boost GDP growth in the second half.

The Nikkei and Topix retreated 0.6 percent and 0.5 percent respectively, hitting over two week lows as a strong yen dragged on exporters. Financials also declined after the Bank of Japan reduced its purchases of 5 to 10 year bonds at its regular operation. July manufacturing PMI indicated that the sector continued to expand, albeit at a slightly slower pace — the reading was an eight month low of 52.2.

Both the S&P/ASX and all Ordinaries were 0.6 percent lower. The big four banks declined prior to the release of inflation data Wednesday. Woodside Petroleum, Santos, Origin Energy and Oil Search declined after oil prices tumbled on Friday on expectations of a rise in OPEC production for July. A drop in iron ore prices pulled down miners Rio Tinto and Fortescue Metals Group. Gold miners Evolution and Newcrest climbed amid an uptick in gold prices to a four-week high.

The Kospi edged up 0.1 percent. The Sensex added 0.7 percent to hit fresh record highs as continued buying by foreign funds and domestic institutional investors.

Looking forward

French June producer price index will be released. German July Ifo survey will be reported. In the US, both the FHFA and S&P Case Shiller house price indices will be released. July consumer confidence will be reported. The FOMC begins its two day meeting.

Global Stock Markets

Global Stock Markets

*Note — all releases are listed in local time.










Source: Fidelity

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Jesmond Mizzi Financial Advisors Disclaimer:

This article, does not intend to give investment advice and the contents therein should not be construed as such. Jesmond Mizzi Financial Advisors Limited is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact Jesmond Mizzi Financial Advisors Limited at 67, Level 3, South Street, Valletta, or on Tel: 21224410, or email jesmond.mizzi@jesmondmizzi.com

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