Earnings misses and weak flash PMI drive stocks down By Colin Cieszynski Chief Market Strategist, CMC Markets Stock markets in Europe and the US have started the day on the back foot once again after overnight news saw one disappointment after another. It has been one of the busiest days so far for earnings reports and on balance, the results weren’t all that great. A lot of companies, particularly in the technology sector, either missed on earnings or guidance or cut their outlooks for the rest of the year with the higher USD and weaker overseas economies among the more popular excuses given. General Motors joined Harley Davidson in indicating that recent softness in consumer spending has hit big ticket items. Caterpillar beat the street but expectations were really low to begin with and the company warned traders not to expect that performance to repeat through the rest of the year. The one bright spot remained the pharmaceuticals and biotech sector. . Flash manufacturing and service PMI reports so far have been weak across the board indicating that the world economy has weakened into April despite the efforts of central banks in Europe, China and Japan to turn things around. US flash PMI due later this morning could spark a lot of activity and FOMC speculation with traders still trying to figure out if recent weak results really were weather related and if the US economy will be able to roar back like it did last year, or continue to falter. Currency trading has also been active today. EUR and CHF which underperformed yesterday have bounced back on reports that Greece may be getting closer to a deal with its creditors, but who knows really? NZD has been totally crushed overnight. Apparently the RBNZ Deputy Governor tried (and seems to have succeeded) to talk the Dollar down again indicating the central bank remains stimulative (which comes as laughable to me considering they raised interest rates 4 times last year and have not cut since) suggesting maybe they are starting to plan rate cuts. Weak flash PMI for China and Japan hasn’t helped resource currencies in general with AUD also among the underperformers. CAD is steady with USD getting some support from a 1% gain in crude oil prices today. Corporate News Facebook $0.42 vs street $0.41, daily active users 936M above street 920M, mobile users 798M up 31% over year. Caterpillar $1.72 vs street $1.35, raised 2015 year guidance to $5.00 from $4.75, expects sales to be below last year and remaining quarters to be more sluggish General Motors $0.86 vs street $0.95, sales $35.7B below street $36.4B 3M $1.85 vs street $1.93 Union Pacific $1.30 vs street $1.38 Eli Lilly $0.87 vs street $0.77 AbbVie $0.94 vs street $0.85 Pepsico $0.83 vs street $0.79 Hershey $1.09 vs street $1.16, cut 2015 sales growth forecast to 3.5%-4.5% from 4.0%-6.0% due to slower growth in China EBay $0.77 vs street $0.70, lowers full year sales guidance to $18.35-$18.85B from $18.60-$19.10B Qualcomm $1.40 vs street $1.33, guides next Q to $0.85 to $1.00 below street $1.14. cuts Sep 2015 year guidance to $4.60-$5.00 from $4.85-$5.05 Texas Instruments $0.61 vs street $0.62, expects continues pressure on business from USD and weakness in the communications equipment and persona electronics sectors. Citrix Systems $0.65 in line with guidance, guides next Q to $0.80-$0.83 below street $0.86 F5 networks $1.59 vs street $1.50, guides next Q sales to $475-$485M below street $489M blaming impact of higher USD Economic News Economic reports released overnight and this morning include: US jobless claims street 287K UK retail sales street 5.4% UK retail ex auto street 5.5% China flash manufacturing PMI 49.2 vs street 49.6 Japan flash manufacturing PMI 49.7 vs street 50.7 Germany flash manufacturing PMI 51.9 vs street 53.0 Germany flash service PMI 54.4 vs street 55.5 France flash manufacturing PMI 48.4 vs street 49.2 France flash service PMI 50.8 vs street 52.4 Eurozone flash manufacturing PMI 51.9 vs street 52.2 Eurozone flash service PMI 53.7 vs street 54.2 Singapore consumer prices (0.3%) vs street (0.5%) Singapore core CPI 1.0% vs street 1.1% NZ consumer confidence 128.8 vs previous 124 6 Economic reports due later today include: 9:45 am EDT US flash manufacturing PMI street 55.7 10:00 am EDT US new home sales street 515K 10:30 am EDT US natural gas street 84 BCF
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