Market briefing: US markets closed mostly lower yesterday, amid a mix bag of corporate earnings
Date
7/20/2016 7:54:03 AM
(MENAFN- ProactiveInvestors - UK) Proactive Investors, 08:34
UK Market Snapshot
UK markets finished higher yesterday. Data showed that the UK consumer prices rose more than expected on an annual basis in the 'Brexit' month. Coca-Cola HBC climbed 3.1%, after a leading broker upgraded its rating on the stock to 'Overweight' from 'Neutral'. Royal Mail gained 1.7%, after it reported an in-line trading update for the three months ended June. On the downside, Rio Tinto dipped 3.5%, as its iron ore production rose less than analysts' expectations in the second quarter. Other miners, Anglo American, BHP Billiton and Glencore fell 2.2%, 2.9% and 3.5%, respectively. BT Group slid 0.6%, after a parliamentary select committee accused it of making strategic decisions that put the group's interests above shareholders and customers and criticised it for underinvesting in Openreach. The FTSE 100 advanced marginally, to close at 6,697.4, while the FTSE 250 rose 0.2%, to settle at 16,906.3.
US Market Snapshot
US markets closed mostly lower yesterday, amid a mix bag of corporate earnings. Netflix tanked 13.1%, its worst single-day drop since October 2014, after it reported disappointing growth in its new subscribers for the three months ended 30 June. Philip Morris International dropped 3.0%, as its earnings for the second quarter fell short of analysts' expectations. Goldman Sachs Group dipped 1.2%, despite posting upbeat revenue and earnings for the second quarter. IBM shed 0.2%, after its Q2 revenue fell for the 17th quarter in a row, though still slightly better than expectations. Bucking the trend, Johnson & Johnson advanced 1.7%, after it posted upbeat results in the second quarter and increased its financial outlook for the full year. The S & P 500 slipped 0.1%, to settle at 2,163.8. The DJIA rose 0.1%, to settle at 18,559.0, while the NASDAQ slid 0.4%, to close at 5,036.4.
Europe Market Snapshot
Other European markets ended in the red yesterday, after the Euro-zone and German ZEW economic sentiment slumped into negative territory for July. Ericsson tumbled 5.6%, after it reported lower than expected sales for the second quarter. Akzo Nobel declined 4.3%, after it reported downbeat revenue in the second quarter and also gave a negative outlook. Fiat Chrysler Automobiles lost 3.4%, after it informed that it is being probed by the US authorities over sales figures issue. On the positive side, Zalando soared 21.8%, after it posted better than expected profit for the second quarter and boosted its profit margin for the full year. The FTSEurofirst 300 index declined 0.4%, to close at 1,332.2. Among other European markets, the German DAX Xetra 30 fell 0.8%, to close at 9,981.2, while the French CAC-40 shed 0.6%, to settle at 4,330.1.
Asia Market Snapshot
Markets in Asia are trading mostly lower this morning, taking overnight cues from their US peers. In Japan, steel manufacturers, Kobe Steel, Nippon Steel & Sumitomo Metal and JFE Holdings have eased 3.2%, 3.5% and 5.8%, respectively. Ricoh has declined 4.2%, after its Indian subsidiary admitted that some of its accounts were falsified and unaudited estimates for losses for year ended 31 March were about $167.0 million. However, McDonald's Holdings Co Japan has jumped 6.7%, on news that it will be a sponsor of 'Pokemon Go' in Japan. In Hong Kong, China Petroleum & Chemical has gained 0.5%, while Sinopec Oilfield Service has fallen 1.3%. In South Korea, Lotte Shopping and POSCO have dipped 0.5% and 0.7%, respectively. The Nikkei 225 index is trading 0.7% lower at 16,602.9. The Hang Seng index is trading 0.7% up at 21,833.3, while the Kospi index is trading 0.2% lower at 2,012.9.
Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.41% or $0.19 higher at $46.85 per barrel, ahead of the Energy Information Administration's weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 0.64% or $0.30, to settle at $46.66 per barrel, amid global glut concerns and fears that demand would fall after the IMF downgraded its global economic outlook for 2016 and 2017. Meanwhile, the American Petroleum Institute reported that US crude stockpiles dropped more than anticipated by 2.3 million barrels for the week ended 15 July.
Gold
At 0330GMT today, Gold futures contract is trading a tad or $0.40 higher at $1332.70 per ounce. Yesterday, the contract advanced 0.23% or $3.00, to settle at $1332.30 per ounce, as gold prices received support due to a lacklustre close in the US stock markets.
Currency
At 0330GMT today, the EUR is trading 0.09% lower against the USD at $1.1011, ahead of the Euro-zone current account data for May, due to release today. Yesterday, the EUR weakened 0.49% versus the USD, to close at $1.1021, after the Euro-zone ZEW economic sentiment survey slumped in July, mainly driven by the Brexit outcome.
At 0330GMT today, the GBP is trading 0.18% lower against the USD at $1.3087, ahead of the ILO unemployment rate for the three months to May, set to release in a few hours. Yesterday, the GBP weakened 1.09% versus the USD, to close at $1.3111. In other news, the UK annual inflation advanced more than expected in June due to increase in airfares.
Fixed Income
In the US, long term treasury prices rose and pushed yields mostly lower, amid weakness in the US equity markets. Yesterday, yield on 10-year notes fell 3 basis points to 1.56%, while yield on 2-year notes gained 2 basis points to 0.70%. Meanwhile, 30-year bond yield fell 3 basis points to 2.27%.
Key Economic News
IMF cut its global economic growth rate
The International Monetary Fund (IMF) notched down its global growth estimate for this year and next by 0.1 percentage point, with global growth now predicted at 3.1% in 2016 and 3.4% in 2017, as Britain's surprise vote to leave the European Union (EU) last month weighs on consumer confidence and investor sentiment. However, the IMF's latest outlook is based on a 'benign assumption' that the UK and the EU preserve much of their key trade, finance and economic relationship. Further, the fund expects the UK economy to grow by 1.3% in 2017, 0.9 percentage points lower than its April estimate.
UK CPI advanced as expected in June
On a monthly basis, the consumer price index (CPI) climbed 0.20% in June, in the UK, in line with market expectations. In the prior month, the CPI had registered a similar rise.
UK CPI advanced more than expected in June
On a YoY basis, the CPI in the UK registered a rise of 0.50% in June, more than market expectations for a rise of 0.40%. In the prior month, the CPI had registered a rise of 0.30%.
UK core CPI rose more than expected in June
On a YoY basis, the core CPI registered a rise of 1.40% in June, in the UK, higher than market expectations for a rise of 1.30%. The core CPI had advanced 1.20% in the previous month.
UK output PPI rose as expected in June
In the UK, the non-seasonally adjusted output producer price index (PPI) rose 0.20% on a MoM basis in June, compared to a revised similar rise in the prior month. Market anticipation was for output PPI to climb 0.20%.
UK output PPI fell less than expected in June
In June, the non-seasonally adjusted output PPI slid 0.40% on a YoY basis in the UK, compared to a revised fall of 0.60% in the previous month. Market anticipation was for output PPI to fall 0.50%.
UK PPI core output advanced as expected in June
In June on a MoM basis, the non-seasonally adjusted PPI core output in the UK registered a rise of 0.10%, meeting market expectations. In the previous month, PPI core output had registered a revised similar rise.
UK input PPI rose more than expected in June
In June, on a monthly basis, the non-seasonally adjusted input PPI recorded a rise of 1.80% in the UK, compared to a revised rise of 2.20% in the previous month. Market anticipation was for input PPI to climb 1.10%.
UK PPI core output rose more than expected in June
The non-seasonally adjusted PPI core output in the UK climbed 0.70% on a YoY basis in June, compared to a revised rise of 0.60% in the previous month. Markets were anticipating PPI core output to rise 0.60%.
UK retail price index rose more than expected in June
In June, the retail price index in the UK advanced 1.60% on an annual basis, compared to an advance of 1.40% in the prior month. Market expectation was for the retail price index to rise 1.50%.
UK input PPI fell less than expected in June
The non-seasonally adjusted input PPI in the UK dropped 0.50% in June on an annual basis, compared to a revised fall of 4.40% in the prior month. Market expectation was for input PPI to fall 0.80%.
UK retail price index ex-mort int. payments rose more than expected in June
On an annual basis in June, the retail price index ex-mort int. payments climbed 1.70% in the UK, higher than market expectations for a rise of 1.50%. The retail price index ex-mort int. payments had risen 1.50% in the prior month.
UK retail price index climbed in June
The retail price index recorded a rise of 0.40%, on monthly basis, to a level of 263.10 in the UK, in June, compared to a level of 262.10 in the previous month. Market expectation was for the retail price index to climb to 262.70.
Euro-zone economic sentiment index declined in July
The economic sentiment index dropped to -14.70 in July, in the Euro-zone. The economic sentiment index had recorded a level of 20.20 in the prior month.
Euro-zone construction output fell in May
On a MoM basis, the seasonally adjusted construction output registered a drop of 0.50% in May, in the Euro-zone. In the previous month, construction output had recorded a revised drop of 0.30%.
German economic sentiment index fell in July
Compared to a reading of 19.20 in the prior month the economic sentiment index eased to -6.80 in Germany, in July. Market anticipation was for the economic sentiment index to fall to a level of 9.00.
German current situation index dropped in July
In July, the current situation index recorded a drop to 49.80 in Germany, compared to a level of 54.50 in the prior month. Markets were expecting the current situation index to ease to a level of 51.80.
US Redbook index eased in the last week
On a MoM basis, the seasonally adjusted Redbook index dropped 0.50% in the week ended 15 July 2016, in the US. The Redbook index had recorded a drop of 0.30% in the previous week.
US housing starts climbed in June
Housing starts in the US climbed 4.80%, on monthly basis, to an annual rate of 1189.00 K in June, compared to market expectations of 1166.00 K. In the prior month, housing starts had registered a revised level of 1135.00 K.
US building permits advanced in June
Building permits in the US climbed 1.50%, on MoM basis, to an annual rate of 1153.00 K in June, compared to a revised level of 1136.00 K in the previous month. Market anticipation was for building permits to climb to a level of 1150.00 K.
US Redbook index advanced in the last week
In the US, the Redbook index rose 0.40% on a YoY basis, in the week ended 15 July 2016. The Redbook index had registered a rise of 0.80% in the prior week.
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