Morning Message

Mid-Week Market Update

Wednesday 26th April 2017

European shares dipped this morning as some disappointing corporate results weighed on indexes. The ESTX 50 (-0.22%), UK markets (-0.13%), Dax (-0.06%) and the CAC 40 (-0.05%) all posted losses in early trading. BIC was the top faller, plunging -12% to a more than two year low, after its first quarter net income and sales fell. Yara fell -5.5% after it missed first quarter forecasts as margins squeezed by rising natural gas prices. Credit Suisse, which kicked off much anticipated results for European banks with a beat and plans for a $4 billion cash call, rose +2.8%. French luxury group Kering jumped +10% to record highs after strength at Gucci and Yves Saint Laurent, helped the company beat expectations.

US stocks gained as strong earnings underscored the health of corporate America. The Dow Jones Industrial Average (+1.12%), S&P 500 (+0.61%) and the Nasdaq Composite (+0.70%) all increased. Overall profits of S&P 500 companies are estimated to have risen 11% in the first quarter, the most since 2011. Caterpillar was up +7.7% after hitting a multi year high and McDonald’s jumped +5.6% after both beat profit estimates. Homebuilders fell on concern new tariffs by the Trump administration on Canadian softwood lumber imports will raise costs. Toll Brothers lost -1%. PulteGroup’s stock closed down almost -4%, after also reporting first quarter results that missed analyst estimates. D.R.Horton also lost -1%.

Asian stocks were higher following a rise in US indexes on the back of strong earnings announcements and on expectations for President Trump’s impending tax reforms. The Nikkei 225 (+1.10%), Hang Seng (+0.38%) and the S&P/ASX 200 (+0.69%) all advanced. Japan Post Holdings closed +1.16% higher despite reporting a $3.6 billion writedown on its Australian logistics units, Toll Holdings, and also estimated losses of 40 billion yen, its first annual loss in 10 years. Toshiba rose +2.27% after the Wall Street Journal said the US government could potentially provide support to Toshiba’s US nuclear arm Westinghouse.

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