Weak Earnings, Trade Tensions Weigh on Global Stocks
18 Juli 2019 - 3:29PM
Dow Jones News
By Lauren Almeida and Anna Isaac
Equities fell around the world Thursday as another snag in
U.S.-China trade talks and weak earnings shook investor
confidence.
In U.S. offhours trading, shares in Netflix fell 11% after the
streaming giant said its number of subscribers in the U.S. declined
for the first time in nearly a decade. Ebay rose 5.7% after the
online marketplace raised its profit outlook and notched
better-than-expected quarterly results. Meanwhile, Qualcomm dropped
0.9% after the European Union announced a second antitrust fine
against the telecommunications giant.
Futures tied to the Dow Jones Industrial Average slipped 0.1%, a
day after U.S. stocks fell as the start of earnings season exposed
weaknesses in the growth outlook for some companies. Microsoft is
set to report second-quarter results later Thursday.
In Europe, the benchmark Stoxx Europe 600 index was almost flat,
with declines in the technology and energy sectors offset by gains
in health care. Shares in SAP dropped 6.9% after the German
business-software maker reported disappointing second-quarter
results. Nordea Bank fell 5.7% after the Helsinki-based lender
reported a 39% drop in profit.
Novartis led pharmaceutical stocks higher with a 4.5% jump after
the Swiss drugmaker raised its full-year forecast for the second
time this year.
While the European economy is doing well, "it's more about
downside risk coming from trade wars combined with the everlasting
Brexit risk," said Jorge Garyao, global head of inflation strategy
at Société Générale. The trade tensions that are currently focused
on U.S.-China "could easily move into the eurozone," he said.
The U.K.'s FTSE 100 index continued to trade down 0.5% after the
government spending watchdog, the Office for Budget Responsibility,
warned of a recession lasting at least a year if Britain quits the
European Union without a deal. The report said that a no-deal
Brexit could cause the U.K. economy to shrink 2.1%.
In Asia, the Shanghai Composite Index fell 1%. Progress toward a
trade deal has stalled while the Trump administration determines
how to address Beijing's demands that it ease restrictions on
Huawei Technologies, people familiar with the talks said. No
face-to-face meetings have taken place or been scheduled since
President Trump and President Xi Jinping of China met last month in
Japan and agreed to resume talks.
"Markets don't seem to be taking the comments on trade tensions
very well," said Fritz Louw, a currency analyst for Mitsubishi UFJ
Financial Group. He added that investors are likely to see several
days of volatility as they await progress in talks between China
and the U.S.
The Nikkei 225 gauge dropped nearly 2% after Japan's exports
tumbled for the seventh straight month in June, hit by a sharp drop
in shipments of chip-making tools and automobile parts to
China.
The yield on the 10-year Treasury fell to 2.071% from 2.102% on
Wednesday, according to data from Factset. Yields fall when bond
prices rise. The WSJ Dollar Index, which measures the currency
against a basket of peers, was down 0.07%.
--Caitlin Ostroff contributed to this article.
Write to Lauren Almeida at lauren.almeida@wsj.com and Anna Isaac
at anna.isaac@wsj.com
(END) Dow Jones Newswires
July 18, 2019 09:14 ET (13:14 GMT)
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