Markets fail to break losing streak | Calamatta Cuschieri

Global markets were lower on Thursday with investors showing signs of concern over Brexit and the US election. Corporate earnings were once again in the spotlight, adding some tension to the market after a mix of results. Asia closed in the red, while European markets finished flat, as the major bourses were under pressure. US stocks gave up their gains made in the morning trade, as concerns over the presidential election lingered. Thursday marked the eight session in a row that the S&P closed lower, matching its longest losing streak since October 2008.

Sterling jumps

A surprise rise in the pound added pressure on UK stocks on Thursday after a high court ruled the government cannot trigger the Brexit process without signoff from parliament. The news sent the FTSE 100 trading in the red, after opening the day in positive territory.

The benchmark headed lower after the government was dealt a major blow to its Brexit plans, with a high court saying Prime Minister Theresa May does not have the power alone to trigger the so-called Article 50 of the Lisbon Treaty and kick off negotiations to leave the European Union. This means she must put it to a vote in Parliament. Media reports immediately stated that the government will try to appeal the verdict.

This decision sent the pound soaring against the dollar and the euro, trading at an almost four-week high. A strong pound tends to weigh on the FTSE 100 because of the index’s many export-dependent companies that benefit from a weaker currency.

Banks in focus

A rise in the banking sector helped lift the Stoxx Europe 600, putting it on track to break an eight-session losing streak.

Société Générale soared on Thursday after the French lender posted better-than-expected third-quarter profits. Its results were lifted by a strong performance from its investment banking business, which offset a decline in retail banking revenue. Shares were up 5.84%.

Elsewhere, Dutch banking giant ING Group was up 3% after the company enjoyed a 27% rise in third-quarter profits. The bank attributed this rise as it benefited from growth in loans and deposits.

Most other banks were all trading in the green. Royal Bank of Scotland enjoyed a rise of 7% on Thursday, and both Barclays and Lloyds traded around 2.3% higher.

Credit Suisse Group, however, bucked the positive trend in the sector, after its shares tumbled 6.5%. The loss came as the Swiss bank reported a steep drop in profit, despite beating analysts’ forecasts.

Facebook profits soar, but growth concerns emerge

Facebook reported its third-quarter results this week. The social media giant enjoyed a mammoth 56% rise in revenue, reaching around $7 billion. Its quarterly profit was equally impressive, as it nearly tripled to $2.38 billion as the company is reaping the benefits of its dominance in mobile advertising.

Facebook’s top-line growth rate is double that of any other US company, with revenue of $20 billion or more, excluding those growing through acquisitions, according to data from Standard & Poor’s Capital IQ.

Yet Facebook said that it can’t maintain its current pace. Starting in the middle of next year, Facebook will stop showing users more ads in their news feed, the tactic it has been using to juice revenue growth for the past two years, the company said on Wednesday. As a result, advertising growth will “come down meaningfully”, Chief Financial Officer Dave Wehner said during a call with analysts.

Facebook’s stock price was down more than 7% in after-hours trading because of the caution about advertising growth. Facebook also plans to spend more on data centres and hiring engineers next year.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is 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 Investments Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.