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Markets Dip as Trump Slams Fed

US and European indices moved slightly lower as investors were overwhelmed with corporate news and earnings reports. The UK finished marginally higher after equities received support from a weakening pound. Asian indices failed to hold on to early gains and closed in the red.

US indices move into the light red as Trump comments lambasts Fed

US indices retreated as optimism began to fade while investors continued to assess fresh earnings reports. Markets reacted negatively to Donald Trump criticising the Federal Reserve’s interest rate hikes. At the time of writing, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite Index were down by -0.3%, -0.2% and -0.2% respectively.

Comcast Corp rallied +2.9% after announcing that it would not pursue a deal to buy 21st Century Fox (-1.0%), instead focusing its attention on Sky (-1.5%). This leaves the field clear for Walt Disney (+1.8%), which last month won the Justice Department’s approval for its Fox acquisition. eBay plunged -8.2% after the company released earnings that beat expectations but on lower revenues, and issued weaker than expected profit guidance. A day after the FDA put out a plan to encourage the development and uptake of lower-priced biosimilar drugs, a short-seller highlighted the risks to earnings of AbbVie, which dropped -4.3%. Phillip Morris declined -2.2% after the tobacco giant released a full-year profit outlook that came in below expectations. Domino’s Pizza moved -1.9% lower after reporting same-store sales that missed expectations. Amazon slid -0.6% after denying that Amazon Web Services will start selling network switches to other businesses; switch-maker Cisco gained +0.8%. Tesla fell by -0.5% after analysts downgraded the stock based on lost tax credits and competition. IBM climbed +3.0% higher after reporting earnings late in the previous session. Microsoft, which is due to report after the close, moved -0.7% lower.

Europe slips down while the UK inches up as earnings are released

European equities finished narrowly lower as a fresh wave of earnings reports washed over investors. The Stoxx Europe 600 shed -0.2%. Volvo tacked on +1.5% after posting a +59.0% rise in second quarter profit. LVMH lost -1.1%.

The UK’s FTSE 100 inched +0.1% into the light green, as the pound fell after disappointing British retail sales contributed to speculation that the Bank of England may refrain from hiking rates in August, giving stocks a boost. Unilever rose +3.0% after reporting first-half earnings. Advertising giant WPP fell -2.9%. SSE shed -2.4% after reporting core earnings that failed to meet expectations, saying that warm weather weighed on gas demand.

Asian benchmark indices maintain red run with modest losses

Asian markets finished in the light red, as indices were unable to hold on to early gains that were inspired by corporate earnings and a Federal Reserve report of the US economy. The Shanghai Composite Index (-0.5%), the HSCEI (-0.5%), the Hang Seng Index (-0.4%), South Korea’s Kospi (-0.3%) and Japan’s Topix (-0.1%) all declined

The ASX 200 rose +0.3%, as positive earnings and employment data rolled in.

Crude, gold and iron ore extend the previous session’s gains

WTI crude added +1.4% to US$69.72, while gold inched up +0.1% to US$1,228.31. Iron ore rose +0.8% to US$64.20/MT.

Today’s events

  •  Stats NZ: International travel and migration - June 2018
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