Market Commentary | Markets lower on Tuesday

Corporate earnings set the tone on global equity markets on Tuesday, with stocks from Europe to America slipping after a three-week run added around $4.6 trillion in value worldwide. Disappointing corporate updates and lackluster economic sentiment data from Germany soured the investing mood, causing stock markets to retreat.

Stocks in London remained lower, as the Office for National Statistics announced that inflation in the U.K rose 0.5% in June - which was more than was expected. Furthermore, most of the data for the inflation reading was collected ahead of the Brexit referendum, meaning the report does not reflect the true impact of the vote on the economy.

Mining companies led the FTSE lower on Tuesday, with Rio Tinto shares losing 3.5%. The natural resources company reported a rise in iron-ore shipments for the second quarter, yet this figure was below analyst estimates. Glencore and BHP Billiton were also lower, giving up 3.41% and 2.91% respectively.

Oil futures also inched lower as traders fretted over ample inventories of crude and petroleum products and the potential for a slowdown in energy demand, on the back of a lower global economic outlook from the International Monetary Fund (IMF). Crude lost 0.50%, on NYSE on Tuesday. This led energy companies such as Chesapeake and BP Plc to trade lower during the session. The IMF struck a downbeat tone on the UK economic outlook, downgrading its 2017 GDP forecast to 1.3% from 2.2% because of the uncertainty caused by Brexit.

On a more upbeat note, shares of Zalando soared 22% after the online retailer lifted its full-year guidance and said its profit-before-tax margin is set to come in between 7.5% and 9%, beating analyst expectations of 5%.

Investors, however, were anxiously watching corporate results in the thick of the second quarter earnings season. After getting off to a strong start, US earning have stalled so far, as several technology and financial firms disappointed.

Netflix shares tumbled 13% after it revealed that it added slightly less than 1.7 million new subscribers during the second quarter – thereby falling short of expectations. Goldman Sachs results continued a market-beating streak for financials that JPMorgan kicked off last week, yet its shares fell, as some analysts said that profit figures were not as impressive as those of its peers. On the upside, Johnson & Johnson climbed after reporting quarterly profit that beat analyst estimates. IBM Corp was also trading higher, after sales increased for the first time in a key unit.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.