Morning report

Morning News Summary

Earnings Beats Power US Gains

Global markets were mixed on a busy day of trading amid an influx of news. News of a Brexit deal initially boosted European and UK stocks, but signs it may fail to win support in the UK parliament derailed gains in late trading. In the US, a fresh batch of corporate earnings helped lift markets, while in Asia trade deal concerns left markets mixed.

US stocks driven higher by solid quarterly earnings

A continued streak of upbeat corporate earnings has helped US equities stay out of the red, despite signs of a proposed Brexit deal being turned down in the UK weighing on investors. The S&P 500 (+0.3%), Dow Jones Industrial Average (+0.1%) and Nasdaq Composite (+0.4%) rose, turning around yesterday’s losses thanks to positive earnings, with around 76% of companies on the S&P 500 so far reporting earnings that topped analyst expectations.

Netflix shares climbed +3.6% higher after it announced a more upbeat than expected third-quarter result, adding 6.8m new paying subscribers in the quarter, most of which came from outside of the US. Morgan Stanley joined other major banks JPMorgan Chase (+0.3%), Citigroup (-0.1%) and Bank of America (-0.3%) who have reported so far, with shares of the company adding +1.9% after it reported profits beat expectations. Healthcare stocks were the best performing in the index, with shares of majors such as McKesson (+3.8%), Humana (+2.6%), Bristol Myers Squibb (+1.9%), Abbvie (+1.7%) and Johnson & Johnson (+1.5%) surging higher. IBM shares tumbled -6.0% after it reported revenue which missed Wall Street estimates.

Europe turns lower, while UK stocks hold onto slim gains

European investors cheered reports that key political leaders had reached another deal for the UK to exit the EU, but European equities turned lower late in trading after the Northern Irish Democratic Unionist Party (DUP) stated it would vote against the deal on Saturday, derailing hopes of the deal getting the approval needed. The Stoxx Europe 600 rose as much as +0.6% during the day, but eventually closed -0.1% lower.

The UK’s FTSE 100 pulled back from early gains, closing just +0.2% higher as did the mid-cap FTSE 250. Investors first cheered the news Boris Johnson had formed a Brexit plan with the EU but they soon turned sour when the DUP said they wouldn’t vote for it, meaning Johnson would need to win over some Opposition MPs to get the deal through. Helping the FTSE stay afloat was a drop in the pound after signs the deal wouldn’t go through, which lifted multinational stocks.

Asia mixed on sliding trade deal optimism

Asian markets were mixed, albeit leaning more towards the red after reports suggested a US–China ‘phase one’ limited trade deal still has a ways to go. The Hang Seng rose +0.7%, while the Kospi (-0.2%) and Nikkei 225 (-0.1%) both fell, and the Shanghai Composite closed relatively unchanged.

The ASX 200 climbed +0.8% amid a flurry of earnings and production reports.

Crude and iron ore down, gold up

WTI crude fell -0.8% to US$52.94 and iron ore fell -US$3.00 to US$86.50/MT, while gold rose +0.4% to US$1,495.62.

Today’s events

  • SSM: Kathmandu
  • AGM: Marlin Global, Sky City Entertainment
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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your Authorised Financial Adviser.