Global stocks hit the skid as corporate results disappoint

AFP, NEW YORK: World stock markets fell Friday as a rash of disappointing company results triggered profit-taking ahead of the weekend, although the Dow managed to hold on for its third straight record close.

Wall Street recovered from early losses, but still felt the impact of downbeat results at the end of the week.

“It was a pretty good week, obviously ending on a sour note,” Chris Low of FTN Financial told the news agency.

“We started the week with better than expected earnings form the big banks. At the end of the week, we had Amazon.”

The online retail behemoth fell 2.5 per cent after the company reported a dip in profits despite a big boost in sales.

Meanwhile, the oil supermajors were split, with ExxonMobil falling 1.5 per cent as second quarter profits surged but missed expectations as output fell, while Chevron rose 1.8 per cent after it reported better-than-expected profit.

Investors also were digesting the better but below-expectation GDP growth of 2.6 per cent in the second quarter, as well as the political uncertainty after another failed attempt at healthcare reform in the US.

“The result has thrown cold water on the hopes for a pro-growth agenda,” economist Diane Swonk said in a research note.

“In fact, policy uncertainty, which places a drag on growth, is measurably on the rise.”

The dollar took a hit from US GDP data which cast further doubt on any early interest rate increase from the Federal Reserve.

Oil got a lift from the weaker dollar, this week’s US stockpile data and lingering expectations of more production cuts, or at least more discipline in implementing the current ones.

Tobacco smoked

Tobacco stocks plunged after the US Food and Drug Administration said it will look at ways for companies to cut nicotine levels in cigarettes to make them less addictive and reduce tobacco-related diseases and deaths.

This will “blow a hole in their earnings,” said Neil Wilson, senior market analyst at ETX Capital in London.

Shares in Altria, which markets brands such as Marlboro and Chesterfield, fell nearly 10 per cent in New York, while in London British American Tobacco fell more than seven percent, and Imperial Brands dropped nearly five per cent.

Mike van Dulken, at Accendo Markets, however, said that the reaction may have been overdone.

“It might not sound great, but it doesn’t read like the industry is destined to go up in smoke,” he said.

The mood also soured in Europe, where shares in Renault tumbled on a weak outlook for the French carmaker despite surging sales and record profits in the first half of 2017.

In Frankfurt, BMW, Daimler and Volkswagen shares also fell. The three were this week hit with lawsuits over their alleged collusion to drive up the prices of their cars.

London’s benchmark

FTSE 100 index was down one percent at the closing bell, weighed down by poor results from troubled telecoms and television firm BT Group.

“The FTSE sell-off has intensified into the close, with the blue chip benchmark hitting its lowest level in over two weeks,” noted Josh Mahoney at IG.

BT shares slid after the group posted a 42 per cent slump in first-quarter profits, rocked by fresh fallout from an Italian accounting scandal.

Barclays shares fell as the bank reported a first-half net loss of £1.21 billion ($1.58 billion, 1.35 billion euros).

 

 

Global stocks hit the skid as corporate results disappoint

AFP, NEW YORK: World stock markets fell Friday as a rash of disappointing company results triggered profit-taking ahead of the weekend, although the Dow managed to hold on for its third straight record close. Wall Street recovered from early losses, but still felt the impact of downbeat results at the end of the week. It was a pretty good week, obviously ending on a sour note, Chris Low of FTN Financial told the news agency. We started the week with better than expected earnings form the big banks. At the end of the week, we had Amazon. The online retail behemoth fell 2.5 per cent after the company reported a dip in profits despite a big boost in sales. Meanwhile, the oil supermajors were split, with ExxonMobil falling 1.5 per cent as second quarter profits surged but missed expectations as output fell, while Chevron rose 1.8 per cent after it reported better-than-expected profit. Investors also were digesting the better but below-expectation GDP growth of 2.6 per cent in the second quarter, as well as the political uncertainty after another failed attempt at healthcare reform in the US. The result has thrown cold water on the hopes for a pro-growth agenda, economist Diane Swonk said in a research note. In fact, policy uncertainty, which places a drag on growth, is measurably on the rise. The dollar took a hit from US GDP data which cast further doubt on any early interest rate increase from the Federal Reserve. Oil got a lift from the weaker dollar, this weeks US stockpile data and lingering expectations of more production cuts, or at least more discipline in implementing the current ones. Tobacco smoked Tobacco stocks plunged after the US Food and Drug Administration said it will look at ways for companies to cut nicotine levels in cigarettes to make them less addictive and reduce tobacco-related diseases and deaths. This will blow a hole in their earnings, said Neil Wilson, senior market analyst at ETX Capital in London. Shares in Altria, which markets brands such as Marlboro and Chesterfield, fell nearly 10 per cent in New York, while in London British American Tobacco fell more than seven percent, and Imperial Brands dropped nearly five per cent. Mike van Dulken, at Accendo Markets, however, said that the reaction may have been overdone. It might not sound great, but it doesnt read like the industry is destined to go up in smoke, he said. The mood also soured in Europe, where shares in Renault tumbled on a weak outlook for the French carmaker despite surging sales and record profits in the first half of 2017. In Frankfurt, BMW, Daimler and Volkswagen shares also fell. The three were this week hit with lawsuits over their alleged collusion to drive up the prices of their cars. Londons benchmark FTSE 100 index was down one percent at the closing bell, weighed down by poor results from troubled telecoms and television firm BT Group. The FTSE sell-off has intensified into the close, with the blue chip benchmark hitting its lowest level in over two weeks, noted Josh Mahoney at IG. BT shares slid after the group posted a 42 per cent slump in first-quarter profits, rocked by fresh fallout from an Italian accounting scandal. Barclays shares fell as the bank reported a first-half net loss of 1.21 billion ($1.58 billion, 1.35 billion euros).