Morning report

Morning News Summary

Global Markets Seeing Red

Global markets were all heading in one direction on Tuesday, with a batch of disappointing earnings results across most major regions contributing to significant losses. The US, Europe, UK and all of the major Asian markets were firmly in the red.

US stocks dive deeper into the red as earnings begin to disappoint

A handful of disappointing quarterly results from blue-chip stocks and a tumble in Chinese stocks after their mini rebound on Monday negatively impacted investor sentiment, helping lead the S&P 500 and Dow Jones Industrial Average down by -1.1% and -1.0% respectively. The Nasdaq Composite also fell by -1.0% as tech stocks couldn’t hold on to yesterday’s gains.

Blue chip industrials Caterpillar and 3M Co have had a rough time, with the two companies providing nearly half the Dow’s losses. Shares of Caterpillar have fallen -5.7% after the company reported profits and revenue ahead of analysts’ expectation, but offered a guidance outlook that was below consensus. 3M stock recovered a touch from deeper earlier losses, but still traded -4.2% lower after reporting profit and revenue that missed expectations, and providing downbeat 2018 guidance. Energy companies struggled as crude oil prices tumbled after Saudi Arabia promised to play a “responsible role” in oil markets. Conocophillips fell -4.6%. Tech stocks such as Nvidia Corp (-3.8%) and Amazon (-2.5%) retraced yesterday’s gains, tracking losses in Chinese Internet stocks such as Tencent (-4.6%). Tesla soared +11.5% after short seller Citron Research flipped its opinion on the stock from negative to positive. McDonald’s helped limit the Dow’s losses, climbing +6.6% higher after reporting a strong quarterly earnings result. The two other notable gains on the Dow Jones were from Verizon Communications and United Technologies, with each rising by +3.4% and +2.3% after reporting solid quarterly earnings that beat expectations.

European and UK stocks fall

European shares fell sharply on Tuesday as disappointing company results ― particularly in the tech sector ― and a mix of political issues including Italy's budget woes piled pressure on markets. The Stoxx Europe 600 fell -1.6%. AMS, a chip provider to Apple (-0.1%), disappointed investors with its fourth quarter forecast, causing the stock to tumble -26.1%. Shares of IT services firm Atos plummeted -22.0% after it cut its revenue growth forecast for 2018. The UK’s FTSE 100 slipped firmly into the red, down -1.2% as questions about Brexit and growing concerns about global growth, particularly in China, knocked markets lower. Fresnillo shares jumped +9.1% higher after a broker analyst upgraded the company to buy following confirmation of a merger between Randgold Resources (+3.8%) and Canada’s Barrick Gold (+1.8%).

Asian markets turn back on yesterday’s gains

Asian markets were back in the red after a China led-rally had driven gains in most markets on Monday. The Hang Seng (-3.1%), Nikkei 225 (-2.7%), Kospi (-2.6%), Shanghai Composite (-2.3%), and Taiwan SE (-2.0%) all made significant losses. The ASX 200 fell -1.0%, tracking losses across Asia.

Crude sinks while gold and iron ore rise

WTI crude fell -4.0% to US$66.38 while gold rose +0.7% to US$1,230.85 and iron ore added +US$1.00 to US$75.40.

Today’s events

• Stats NZ: International visitor arrivals  September 2018
• AGM’s: Solution Dynamics, Skellerup Holdings, Windflow Technology

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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.