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Earnings Season Hits High Gear, EU Markets Rise, RBA Set To Cut Rates In July

July 17
01:04 2019

The U.S. Futures Firm After Earnings From Key Players

The U.S. futures were lower in early premarket action but firmed after earnings were released from key S&P 500 companies. The Dow Jones Industrial Average led the move with an advance of 0.15%. The S&P 500 and NASDAQ Composite were both close behind.

Earnings from Johnson &n Johnson, JP Morgan Chase, and Wells Fargo were all better than expected. Johnson & Johnson reported a 42% increase in EPS driven by unexpected strength in pharma. The company beat the EPS consensus by $ 0.14 and raised full-year guidance because of it. Shares are up about 0.40%.

Results in the banking sector were also better than expected. Wells Fargo and JP Morgan both reported strength in EPS, the caveat is JPM gave weak guidance citing interest rate outlook and Wells Fargo revenue was flat from last year. The good news is that results are driven by strength in consumer banking. United Airlines and CSX both report after the bell.

On the data front, Retail Sales came in much stronger than expected. The 0.4% MOM read is three points above consensus and matched by equal strength in the core numbers. On a YOY basis, sales are up 3.4%. The only negative is that the preceding month was revised down a tenth. Import and Export prices both fell more than expected. Import prices fell -0.90% while Export prices fell -0.7%.

EU Markets Are Up On Earnings

The EU markets are broadly higher as the earnings season gets underway. The French CAC is in the lead with a gain near 0.50%. The UK FTSE 100 is close behind at +0.45% while the DAX lags with a gain of only 0.35%. Shares in the region were buoyed by earnings from Burberry and others although not all reports were good. Burberry reported that revenue and EPS growth saw some strength in the quarter due to the launch of new items. Shares of the stock rose 13.7% on the news.

Shares of Experian fell despite strength in revenue. The company did not meet expectations and revealed some weakness in its UK/Ireland segments. Telecom giant Telenor issued weak guidance for the remainder of the year and drove its shares down -4.35. On the economic front, EU export prices rose 1.4% and hotter than expected while import prices fell. The news is a boost to EU sentiment as it shows foreign demand is still present. This is offset though by a decline in Germany sentiment data that puts economic outlook at a new low.

Asia Mixed, The RBA Is Set To Cut Rates Again

Indices in Asia were mixed following the release of RBA meeting minutes. The minutes show the central bank is ready to act as needed to sustain economic growth in the Land Down Under. Market participants took this to mean the bank would follow up last month’s cut with another rate cut this month. The ASX fell on the news but only -0.18%. The Nikkei led declining markets with a loss of -0.69% while the Korean Kospi led advancing issues with a gain of 0.45%.

This article was originally posted on FX Empire

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