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.
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 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 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.
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.
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