Markets retreated on Thursday, with the S&P 500 and NASDAQ falling from record highs to close with the worst performance in 4 weeks. The main contributing factor was poor earnings reports by major firms which failed to meet expectations coupled with sentiments that the Federal Reserve may not be as aggressive in cutting interest rates as previously interpreted at the European Central Bank’s Policy decision next week.
Amazon reported lower earnings than forecasted as record profits were weakened by a slow-down in its cloud commuting business and higher shipping costs causing share prices to fall post trading hours.
Ford share price was down by 7.5% on closing after earnings estimates were not met. Other firms that disappointed investors were Boeing with shares prices falling 3.7% and Tesla with share prices falling by 13.6%.
Not all earnings were a miss – with Google parent company Alphabet reporting strong earnings triggering a stock buyback scheme which boosted share prices by over 8% post-closing.
Netflix reported a loss of over 130,000 customers last week to competitors which caused the share price to plunge 10%, however earnings expectations from investors remain high as demonstrated by shares gaining 4% on Wednesday.
All sectors of the S&P 500 closed in the negative even as only a third of the companies have reported their earnings till now.
Majority of Asia-Pacific stock closed higher on Thursday, led by the Semiconductor industry reporting better than expected gains along with hopes for resuming US China trade talks next week. China saw gains as 0.48% was added to the Shanghai Composite. Hong Kong’s Hang Seng index gained 0.25%, while Japan’s Nikkei also saw gains of 0.22%. A majority of sectors in Australia were up on Thursday causing the S&P/ASX 200 to close with a gain of 0.61%.
South Korea however saw a slip of 0.38% as economic uncertainty lingers.
European stocks fell on Thursday as the President of the Central Bank, Mario Draghi, failed to provide firm details of the monetary policy stimulus by announcing that interest rates would be left at “present or lower” levels for the first half of 2020, contradicting a previous statement to keep interest rates at “present levels”.
Negative market sentiments in Germany dragged the DAX down by 1.28%. The Stoxx 600 closed lower by 0.6% with a majority of sectors in negative territory.
Shares of Britain’s leading technology firm, Cobham, gained 35% as it was acquired by US private equity firm Advent International and surged to the top of the European index on Thursday.
The British pound fell against the US dollar, after Boris Johnson won a party leadership election, which puts him on track to be confirmed as prime minister.