Oil, iron ore and Wall Street stocks off their highs compounded by disappointing earnings from Google’s holding company Alphabet and an investigation into Daimler’s emissions testing have led to a drop in early trading in European markets.
The pullback in oil and iron ore is natural after such a strong run with Brent crude running into a technical barrier around $46 which on adjusted prices was where prices found a floor after basing in August.
The Japanese Nikkei has been the exception to the rule as bank stocks rallied and the yen lost value on unconfirmed reports that the Bank of Japan would offer negative rates on loans. Offering negative rates on loans would go a long way to counterbalance the negative rates on deposits for bank profitability. It also takes central bank meddling to new levels.
Shares of Daimler have dropped 7% dragging the shares of most European automakers down with them after the company announced it had begun an investigation into its diesel emissions testing. It’s not great timing with the Daimler news arriving just two days after Mitsubishi announced its own improprieties on fuel efficiency. Investors in the auto sector are understandably perturbed.
US stocks look set for a weaker start with the Down Jones expected to slip further away from 18,000 as investors digest more corporate earnings releases.
Shares of Alphabet look set to drop around 6% on the open of US trading after the Google holding company announced results the failed to match high expectations. Google shares dropping after missing high expectations has bucked a trend in the first quarter of companies beating lowered expectations. The drop in pay-per-click costs is one of the stand-out concerns from the quarter but might be inevitable as the company relies more on banners on YouTube and its other platforms.
Before the bell today, bellwether General Electric announces first quarter results. GE is in a process of going back its roots; turning away from the financial sector that brought the company to its knees in the financial crises and buying industrial assets like Alstom’s grid business. An update on more acquisitions of assets spun-off from the contested Halliburton-Baker Hughes deal is expected after reports that private equity group Carlyle is also interested.
Notable earnings before the US open: General Electric, McDonalds, Caterpillar and American Airlines
Notable earnings after the close: NA
USA pre-opening levels
S&P 500: 2 points lower at 2,089
Dow Jones: 19 points lower at 17,963
Nasdaq 100: 41 points lower at 4,499
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