Global stocks pause their rally ahead of the major bank earnings and the fresh US economic data. Asian and European equities were mixed on Tuesday, while Wall Street index futures are moving mostly into the red.
Before the start of the corporate reporting season, investors are refraining from big deals. In addition, markets are waiting for the latest retail sales data in the United States. They could shed more light on whether the US Federal Reserve would actually leave the door open to cut interest rates to support the economy. These hopes have recently led to a record Wall Street rally.
The earnings season kicked off on Monday with the financial report of Citigroup, but by the end of the week will have several important blue-chip companies to publish their earnings. The outlook for this earnings season is bleak, however. Analysts expect S&P 500 earnings to have fallen by 3% in the second quarter. Each positive surprise will be welcomed by the markets and may result in positive momentum for the main indexes.
Asian markets recap
In Japan, the blue-chip index Nikkei 225 recorded a decline of 0.69% to 21,535.25 points. All sectors report losses. Energy companies are under the strongest pressure and lose more than 2% of their value. The best performers of the session on the Nikkei 225 were Oki Electric Industry (+4.51%), Sapporo Holdings (+3.37%) and Toho Co (+2.75%), while on the flipside were Casio Computer Co (-3.95%), JGC Corp (-3.19%) and IHI Corp (-3.11%3). The smaller index Topix dropped by 0.6% to 1,566 points.
In China, the mainland index Shanghai Composite lost 4.57 points, or 0.16%, to 2,937.62 points. Yesterday, the country announced that in the second quarter the economy expanded by 6.2%, which is the weakest growth in 27 years. Meanwhile, Hong Kong’s index Hang Seng added 0.18%.
South Korean index Kospi closed trading with a growth of 0.45% to 2,091.87 points. The Korean Stock Exchange reported on Tuesday that it would impose a 175 million KRW (149,000 USD) fine on the South Korean branch of Bank of America Merrill Lynch due to illegal commercial activities.
In Australia, the benchmark S&P/ASX 200 declined by 0.18% to 6,641.00 points. Shares of the mining company Rio Tinto fell by 0.64% after the group announced a write-off and delays in the operation of its Mongolian mine. In addition, there is a 3.5% decline in iron ore supplies in the second quarter due to interruptions caused by a tropical cyclone earlier in the year.
European markets mid-session recap
European stocks are mixed on Tuesday with Stoxx 600 losing 0.04% to 387.59 points. Market players are largely focused on upcoming results from major companies on Tuesday. Meanwhile, the Eurozone’s trade balance for May came in at a surplus of 23 billion EUR (25.85 billion USD). Seasonally adjusted exports rose by 1.4% while imports were down 1%. The figures provide a fresh indication that the currency area’s economy is holding steady amid global trade tensions.
German index DAX 30 inched lower by 3.28 points, or 0.03%, to 12,384.06 points at 10:00 GMT. July’s economic sentiment figures for Germany came in at -24.5 versus -22.3 expectations, compounding the economic uncertainty shrouding Europe’s largest economy. Banking stocks were among the best performers during the trading with Deutsche Bank gaining 2.35% and Commerzbank rising by 1.8%. The shares of the chemical giants BASF and Bayer rose by 0.3% and 1.7%, respectively. Airlines were also into the rise with Deutsche Lufthansa gaining 2.3%.
French index CAC 40 is up by 8.76 points, or 0.16%, to 5.586.97 points. The shares of Renault and Peugeot were down by 0.53% and 0.45%, while banks BNP Paribas and Societe Generale gained 0.15% and 0.56%.
British blue-chip index FTSE 100 is up by 13.71 points, or 0.18%, to 7,545.43 points during mid-session trading. Luxury brand Burberry jumped nearly 8%, set for its best day in nearly seven years after it posted a stronger-than-expected rise in first-quarter comparable-store sales and affirmed its annual forecast. Airline stocks climbed after Ryanair said deliveries of Boeing’s 737 MAX planes may be delayed further, raising the prospects of over-capacity in Europe would ease. Shares of Europe’s largest budget carrier, which cut its forecast for growth in traveler numbers next summer, rose 1.1%. British Airways owner IAG gained 1% and mid-cap easyJet added 2%.
Wall Street pre-session recap
Wall Street stock index futures were mixed on Tuesday morning ahead of earnings reports from a slew of major American companies.
At around 06:05 a.m. ET, Dow futures were 12 points lower, indicating an implied negative open of around 21 points. The broader S&P 500 stalled, expected to open with a minor decline, while Nasdaq Composite adds less than 3 points.
During the session, the investors will have an eye on US industrial production and retail sales data for June, set to be released Tuesday morning.