On 25 October, 2017 – Most stock indices retreated as investors took profits after some earnings disappointments
Investors wait for the Federal Reserve chair to be announced.
United States
US stocks ended lower on Wednesday, with the Dow Jones industrials and S&P suffering their worst day in seven weeks, on some disappointing quarterly earnings reports and a rise in bond yields. US investors also worried about tax reform plans. The Dow, S&P and Nasdaq all ended 0.5 percent lower.
Telecoms were the hardest hit after AT&T’s latest results showed a bigger-than-expected drop in sales. Verizon and CenturyLink also declined. Boeing, GE, IBM and Caterpillar all declined. Boeing surprised investors by revealing a $329 million charge for its troubled KC-46 aerial refueling tanker program in quarterly results. AMD tumbled after the chipmaker flagged competitive pressures with a forecast that pointed to a drop in revenue in the fourth quarter from the third. Chipotle plunged after the burrito chain posted disappointing sales and earnings, adding to a raft of bad news for the company this year.
Visa reported an 11 percent increase in fourth-quarter profit, driven higher by its purchase of Visa Europe, as more people made payments using its network. Coca-Cola reported better-than-expected profit and revenue for the third quarter as North America sales rose 3 percent on higher demand for Sprite, tea and coffee. Walgreens’ profit and revenue beat expectations in the fourth quarter, as it benefited from an expansion of mail services. Anthem reported better-than-expected profit in the third quarter as the health insurer added more members in its commercial and specialty business and increased its premium rates.
September durable goods orders jumped 2.2 percent and were 8.3 percent higher from the same month a year ago. New home sales for September soared 18.9 percent to an annualized rate of 667,000.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$1.45 to US$1,275.00. Copper futures were down 0.45 percent to US$3.18. WTI spot crude was down 25 US cents to US$52.22. Dated Brent spot crude was up 15 US cents to US$58.48. The US dollar was up against the Canadian and Australian dollars but declined against the yen, euro, pound and Swiss franc. The Dollar Index was down 0.2 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 3 basis points to 2.95 percent and 2.44 percent respectively.
European markets
European stocks retreated Wednesday — investors were cautious prior to the European Central Bank monetary policy meeting scheduled for Thursday. Corporate earnings remained in focus, with strong results posted by luxury goods company Kering and disappointing results from brewer Heineken. Investors were encouraged by some strong business confidence data from Germany, while the better than expected UK gross domestic product provided a boost to the British pound. The FTSE dropped 1.1 percent, the CAC declined 0.4 percent, the DAX retreated 0.5 percent and the SMI was 1.2 percent lower.
Deutsche Lufthansa climbed after the airline reported lower profit in its third quarter. Capgemini jumped after the consulting, technology and outsourcing services firm confirmed its 2017 forecast after reporting 3.4 percent growth in third-quarter revenue. Kering advanced posting higher third quarter sales despite unfavorable currency impacts and a tougher base of comparisons. Air Liquide was higher after backing its fiscal year 2017 profit outlook. Novozymes jumped to a two-year high after it raised its full-year outlook and reported sales and earnings that beat forecasts.
Peugeot was down after its quarterly revenue grew in all regions except China. Lloyds Banking Group gained after its third-quarter pretax profit more than doubled. Antofagasta declined after it reported solid third-quarter operating results but issued disappointing production guidance for 2018. Heineken dropped in Amsterdam after it backed its full-year guidance after reporting lower third-quarter sales in the United States and Europe. In Zurich, Novartis and Roche declined after Novartis received a broker downgrade. Nestlé also finished lower.
Germany’s Ifo business confidence index rose to 116.7 from revised 115.3 in the previous month. First estimate of UK gross domestic product was up 0.4 percent on the quarter and 1.5 percent from the same quarter a year ago.
Asia Pacific
Asian stocks were mostly higher Wednesday after solid earnings reports from Caterpillar and 3M as well as promises of tax reform from the Trump administration helped the Dow post its biggest gain in more than a month overnight.
Japanese shares snapped a 16-day winning streak as investors took profits on recent gains. The Nikkei dropped 0.4 percent while the Topix was down 0.3 percent. Exporters closed mostly lower as the dollar edged up slightly against the yen. Fanuc, Tokyo Electron and Mitsubishi Motor retreated. Komatsu rallied after US construction and mining equipment maker Caterpillar raised its 2017 forecasts. Mitsubishi UFJ Financial climbed after US 10 year Treasury note yields rose on reports that Republican senators were leaning towards Stanford University economist John Taylor to be the next Fed Reserve chair.
The Shanghai Composite added 0.3 percent as investors awaited the announcement by Chinese President Xi Jinping later in the day of new members of the Politburo Standing Committee, the country’s supreme political body. The Hang Seng was up 0.5 percent.
The S&P/ASX and All Ordinaries were up 0.1 percent and 0.2 percent respectively. Miners BHP Billiton, Fortescue Metals Group and South32 rallied while energy stocks such as Oil Search, Santos and Origin Energy climbed. Stockland jumped after the property developer said it is on track to achieve its full-year guidance. The big four banks pared early gains to finish on a flat note ahead of ANZ’s annual results due on Thursday. Third quarter consumer prices were up 0.6 percent on the quarter and 1.8 percent on the year.
The Kospi edged up 0.1 percent. The Sensex rallied 1.3 percent to hit a record high after the Modi government announced a road construction plan over the next five years and a bank recapitalization plan through the issuance of recap bonds and budgetary and market support, in a major push to boost sagging growth. Rating agencies such as Moody’s and Fitch, brokerages and the RBI all showered praise on the government’s big capital infusion plan intended to boost banks’ finances, increase private investment and revive the economy.
Looking forward
Eurozone posts September M3 money supply. The European Central Bank announces its monetary policy decision. The US posts September international trade in goods, pending home sales index and weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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