Morning Message

Mid-Week Market Update

Wednesday 19th April 2017

European shares gained as a rebound in basic resources and some positive first quarter results outweighed weakness in oil and gas stocks. The ESTX 50 (+0.18%), Dax (+0.21%) and the CAC 40 (+0.08%) all increased, while the UK markets (-0.09%) were negative. Oil storage and services company Vopak was a top gainer after its first quarter results, up +5.5%. Burberry dropped -6.1% after it reported a slight slowdown in fourth quarter comparable sales growth rate, saying conditions in the US outweighed exceptional performance in its home market. Zalando fell -5.4% after it said it was happy with its first quarter despite margin pressure due to post-Christmas sales discounting. Vivendi dropped -3.1% after Italy’s watchdog ordered the firm to cut its stake in Telecom Italia or Mediaset.  

US stocks declined as corporate heavyweights Goldman Sachs and Johnson & Johnson disappointed investors with their quarterly results, while geopolitical tensions continued to weigh on market sentiment. The Dow Jones Industrial Average (-0.55%), S&P 500 (-0.29%) and the Nasdaq Composite (-0.12%) all retreated. Johnson & Johnson dropped -3.4% after the company’s quarterly revenue fell short of analysts’ expectations. Goldman Sachs sank -4.6% after a rare profit miss due to weak trading revenue. The bank dragged down other financials and shaved 73 points off the Dow. Although Bank of America reported a better than expected profit, its shares reversed course to trade slightly lower, falling in line with the broader market. Netflix was down -2.2% after reporting weaker than expected subscriber numbers in the first quarter.

Asian stocks retreated, tracking Wall Street’s negative close overnight. The Hang Seng (-0.34%) and the S&P/ASX 200 (-0.56%) both declined, while the Nikkei (+0.07%) was positive. Investors also remained vigilant amid US North Korea tensions and nearing of the French presidential election. Sharp surged +7.44% and Toshiba added +4.87% after Kyodo News cited a Sharp executive as saying the company was considering investing in Toshiba’s memory chip business. Financial stocks in the region were lower, after Goldman Sachs earnings missed the mark. Westpac shed -1.1%, Mitsubishi UFJ was off -0.08% and Hana Financial was down -1.2%.

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