Market Commentary | Positivity sets the tone

Stocks in Europe and Asia headed for a second straight day of gains on Wednesday as investors weighed corporate earnings reports as well as the prospect for central bank action. Wall Street also kept the momentum going on Wednesday, as the main stock-market indexes were hovering near record highs, as a jump in Apple’s shares helped to deliver a positive jolt to investor sentiment.

In Asia, the yen sank against the dollar after Prime Minister Shinzo Abe said his government would present a $265 billion stimulus package to reflate the Japanese economy. The larger-than-expected figure helped lift Tokyo stocks 1.7% and Asian shares reached one-year highs. It remains unclear how much will be spent to boost growth directly, however the package puts pressure on Bank of Japan to take steps to ease monetary policy when it meets on Friday.

Market reaction to disappointing durable-goods orders was muted, as earnings reports continued to roll in on Wednesday. Among the top gainers was French luxury goods maker LVMH. Shares jumped as much as 7.7% after the company posted growth in sales during the first half of the year, despite reporting flat profit figures when compared to a year ago.

Peugeot shares also soared, as the French car maker’s first half net profit more than doubled, to €1.2 billion. This was achieved as the company has been reducing costs stemming from restructuring charges, taxes and debt. Shares were up 8.45%.

Shares in ITV were on course for their best session since November 2012 after announcing their quarterly results. Although first-half net profit was slightly lower, revenue figures were sailing thanks to the expansion of its production business. ITV’s programmes include the likes of “Downton Abbey” and “The X Factor”. 

Among European decliners, Deutsche Bank was trading in the red, after the bank’s second quarter net income sank 98% from the same period last year, dented by weaker performances in trading, investment banking and other core areas. Shares in the German bank were down 3.15% on Wednesday.

On Wall Street, it was Twitter who was amongst the biggest losers. The social media’s disappointing earnings report caused its shares to slip 12.57%. Shares in Coca-Cola endured a similar faith, after the drinks giant posted weaker-than-expected quarterly sales. Shares were down 3.57%.

Energy shares were also lower, as oil futures fell to their lowest levels in around three months, after US government data revealed the first weekly climb in domestic-crude inventories along with a surprise increase in gasoline stockpiles and a rise in total crude production. Companies such as Chesapeake, Exxon Mobile and BP were all trading lower.

But doing very well during Wednesdays session were shares in Apple. The iPhone maker posted quarterly profit that dropped from a year ago, but was still able to beat expectations. Revenue at the world’s largest company by market value also fell, but this was still enough to top Wall Street’s forecasts. Apple’s earnings helped fuel optimism over the outlook for the global economy.

On the Fed front, the US central bank is expected to stand put on interest rates as it releases a policy statement after market closes. Traders will be vigilant to see if Fed chair, Janet Yellen and her colleagues offer any signals on the possibility of a September rate hike.

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.