European Markets Dropped 1% Dragged by Luxury and Resource Stocks After Weak China Economic Data

European markets fell on Monday following the weakness in metals and energy markets after China reported weaker than expected GDP growth data. 

Major averages declined between 0.5% and 1.4% in Paris, Frankfurt and London after China's GDP in the second quarter rose at a slower pace of 0.2% from the previous quarter. 

China also reported other economic data indicating weak economic recovery and investors are losing hopes of immediate stimulus measures. 

China GDP Growth Slowed In June Quarter 

GDP in the second quarter rose 6.3% from a year ago and advanced faster than 4.5% in the first quarter, the National Bureau of Statistics reported Monday. 

Retail sales rose 3.1% in June from a year ago, slower than 12.7% in May and industrial production advanced 4.4% compared to 3.5% in May. 

Private sector investment, a widely watched indicator for confidence in the private sector, declined 0.2% from a year ago in the six-month period to June, from 0.1% in the first five-month period ending in May.  

Fixed asset investment, the government's primary focus in ramping up infrastructure development, rose 3.8% from a year ago in the first six-month period to June, down from the growth of 4.0% in the five months to May.  

Jobless rate among the 16-24 age group jumped to a new high of 21.8% in June from 20.8% in May. 

Higher youth unemployment levels suggested weakening demand from the manufacturing sector.   

Europe Indexes & Yields

The DAX index decreased 0.5% to 16,020.29 16,103.98, the CAC-40 index advanced 1.2% to 7,283.26 and the FTSE 100 index decreased 0.3% to 7,412.09. 

The yield on 10-year German Bunds inched higher to 2.42%, French bonds traded lower to 2.98%, the UK gilts edged up to 4.38% and Italian bonds increased to 4.13%.

European currencies were stable after the dollar index declined 2% in the previous week and extended four month loss to 4%. 

The euro edged higher to $1.12, the British pound to $1.30 and the U.S. dollar fetched 85.87 Swiss cents

Crude oil prices eased after Libya resumed its production over the weekend. 

Brent crude decreased $1.60 to $78.76 a barrel and the Dutch TTF natural gas decreased €0.86 to €25.10 per MWh.

Europe Stock Movers

Mining and resource companies traded lower in London after China reported weaker-than-expected economic growth. 

Anglo American, Glencore, Antofagasta declined between 1.5% and 3% after crude oil prices declined 1% and copper fell 3%. 

Luxury stocks in Paris also declined following the weak retail sales growth in China.

Kering SA declined 1.9% to €490.70, Hermes International SCA dropped 3.9% to €1,916.80 and LVMH fell 4.2% to €854.30.  

Carlsberg SA declined 1.2% to €136.60 after the Russian government took control of its stake in a local brewery. 

UK home builders resumed the decline after the property listing platform Rightmove said that average newly listed property price declined by £905 to £371,907. 

Taylor Wimpey decreased 0.6% to 104.20 pence, Barratt Developments dropped 0.7% to 410.60 pence and Persimmon Plc fell 0.7% to 1,052.80 pence.   

Richemont SA plunged 9% to CHF 140.0 after the Swiss luxury company reported a decline in U.S. demand in its latest quarter. 

Sales in the first quarter ending in June rose 14% to €5.3 billion, or rose 19% in constant exchange rate. 

Sales in Europe increased 10% to €1.1 billion, in Asia Pacific soared 32% t0 €2.2 billion, Japan advanced 6% to €424 million, but fell 4% in the Americas to €1.1 billion. 

Entain Plc declined 1,262.0 pence after the UK-based company agreed to acquire the U.S.-based Angstrom Sports for £122 million or 160 million. 

Citigroup declined 2.1% to $46.68 despite the company reporting better-than-expected quarterly earnings.  

Total revenues, net of interest expenses, declined 1% to $19.4 billion from $19.6 billion and net income declined 36% to $2.9 billion from $4.5 billion and diluted earnings per share fell to $1.33 from $2.19 a year ago. 

Total assets at the end of the quarter increased 2% to $2.43 trillion from $2.38 trillion and deposits were stable at $1.3 trillion from a year ago. 

Citigroup's allowance for credit losses at the end of the quarter increased to $17.5 billion from the previous year. 

During the quarter, the company returned a total of $2.0 billion to shareholders in the form of $1.04 billion in dividends and $1.0 billion in share repurchases.    

Wells Fargo & Company gained 0.6% to $43.95 after the bank reported better-than-expected quarterly results.  

Total revenue in the second quarter ending in June rose to $20.5 billion from $17.1 billion and net income advanced to $4.9 billion from $3.1 billion and diluted earnings per share expanded to $1.25 from 75 cents a year ago. 

In the quarter, average loans increased to $945.9 billion from $926.6 billion and average deposit decreased to $1.35 trillion from $1.45 trillion from a year ago. 

Provision for credit losses rose sharply to $1.7 billion from $580 million a year ago, indicating growing worries about commercial real estate loans and higher credit card balances. 

The company repurchased 100.2 million shares for $4.0 billion in the second quarter. 

The company proposed to increase its quarterly dividend per share to 35 cents per from 30 cents a year ago. 

UnitedHealth Group soared 6.8% to $478.29 after the insurance company reported  better-than-expected earnings on lower-than-expected costs and rising premiums. 

Net income in the quarter increased to $5.47 billion from $5.07 billion and diluted earnings per share rose to $5.82 from $5.34 a year ago. 

Medical care ratio in the quarter increased to 83.2% from 81.5% a year ago  

The insurance company lifted its adjusted annual earnings estimate to between $24.70 and $25.0 from the previous estimate between $24.0 and $25.0. 

BlackRock Inc declined 2.1% to $724.51 after the asset management company reported earnings ahead of market expectation and robust fund inflows. 

Revenue in the second quarter declined 1% to $4.46 billion from $4.52 billion and net income soared 27% to $1.36 billion from $1.07 billion and diluted earnings per share expanded to $9.06 from $7.06 a year ago. 

Assets under management increased 11% to $9.4 trillion from $8.4 trillion a year ago and quarterly inflow of assets was $80 billion with positive asset flows across client types and regions. 

JPMorgan Chase gained 0.5% to $149.70  and the New York-based bank reported higher earnings on bond trading income.

Revenue in the second quarter increased 34% to $41.3 billion from $30.7 billion and net income soared 67% to $14.4 billion from $8.6 billion and diluted earnings per share rose to $4.75 from 2.76 a year ago. 

Return on common equity surged to 20% from 13% a year ago and provision of credit losses surged to $2.9 billion from $1.1 billion respectively. 

Cirrus Logic, Inc declined 1.8% to $81.32 after the company said in a regulatory filing that it plans to reduce its global workforce by 5%. 

Progressive Corp declined 12.4% to $133.77 after the automobile insurance company reported net premium in the quarter increased 14% to $14.7 billion from $12.4 billion and combined ratio increased to 100.4 from 95.6 a yar ago. 

The company swung to a profit of $345.4 million from a loss of $542.9 million and total pretax realized gain on securities increased to $126.9 million from a loss of $1.17 billion a year ago.  

 

Denbury Inc declined 0.6% to $87.20 after the company agreed to be acquired in an all-stock deal of $4.5 billion from ExxonMobil. 

The company agreed to be acquired for $89.45 a share. 

PepsiCo increased 1.1% to $185.22 after the food and beverage company reported better-than-expected revenue of $22.32 billion and adjusted net income of $1.96 a share.  

Revenue in the second quarter increased 10.4% to $22.3 billion from $20.2 billion and net income rose to $2.7 billion from $1.4 billion and diluted earnings per share advanced to $1.99 from $1.03 a year ago. 

MillerKnoll Inc increased 1.1% to $16.65 after the furniture maker reported better-than-expected earnings. 

Revenue in the June quarter declined 13% to $956.7 million from $1.1 billion and net income declined to $0.1 million from $23.2 million and diluted earnings per share dropped to zero from 28 cents a year ago.    

Delta Air Lines rose 3.5% to $49.75 after the international air carrier reported record  quarterly earnings and sales and also lifted its 2023 earnings estimate. 

Revenue in the June quarter increased 13% to $15.6 billion from $13.8 billion and net income soared to $1.8 billion from $735 million and diluted earnings per share advanced to $2.84 from $1.15 a year ago. 

Movers: Black Rock, Citigroup, JPMorgan Chase, UnitedHealth Group, Wells Fargo

Market indexes scaled new peaks in the year after worries inflation and rate hikes eased. 

The S&P 500 index futures traded higher 0.3% to 4,521.33 and the Nasdaq Composite edged higher 0.4% to 14,191.93.

The yield on 2-year Treasury notes decreased to 4.70%, 10-year Treasury notes inched lower to 3.80% and 30-year Treasury bonds edged down to 3.91%. 

Citigroup declined 2.1% to $46.68 despite the company reporting better-than-expected quarterly earnings.  

Total revenues, net of interest expenses, declined 1% to $19.4 billion from $19.6 billion and net income declined 36% to $2.9 billion from $4.5 billion and diluted earnings per share fell to $1.33 from $2.19 a year ago. 

Total assets at the end of the quarter increased 2% to $2.43 trillion from $2.38 trillion and deposits were stable at $1.3 trillion from a year ago. 

Citigroup's allowance for credit losses at the end of the quarter increased to $17.5 billion from the previous year. 

During the quarter, the company returned a total of $2.0 billion to shareholders in the form of $1.04 billion in dividends and $1.0 billion in share repurchases.    

JPMorgan Chase gained 0.5% to $149.70  and the New York-based bank reported higher earnings on bond trading income.

Revenue in the second quarter increased 34% to $41.3 billion from $30.7 billion and net income soared 67% to $14.4 billion from $8.6 billion and diluted earnings per share rose to $4.75 from 2.76 a year ago. 

Return on common equity surged to 20% from 13% a year ago and provision of credit losses surged to $2.9 billion from $1.1 billion respectively. 

BlackRock Inc declined 2.1% to $724.51 after the asset management company reported earnings ahead of market expectation and robust fund inflows. 

Revenue in the second quarter declined 1% to $4.46 billion from $4.52 billion and net income soared 27% to $1.36 billion from $1.07 billion and diluted earnings per share expanded to $9.06 from $7.06 a year ago. 

Assets under management increased 11% to $9.4 trillion from $8.4 trillion a year ago and quarterly inflow of assets was $80 billion with positive asset flows across client types and regions. 

UnitedHealth Group soared 6.8% to $478.29 after the insurance company reported  better-than-expected earnings on lower-than-expected costs and rising premiums. 

Net income in the quarter increased to $5.47 billion from $5.07 billion and diluted earnings per share rose to $5.82 from $5.34 a year ago. 

Medical care ratio in the quarter increased to 83.2% from 81.5% a year ago  

The insurance company lifted its adjusted annual earnings estimate to between $24.70 and $25.0 from the previous estimate between $24.0 and $25.0. 

Wells Fargo & Company gained 0.6% to $43.95 after the bank reported better-than-expected quarterly results.  

Total revenue in the second quarter ending in June rose to $20.5 billion from $17.1 billion and net income advanced to $4.9 billion from $3.1 billion and diluted earnings per share expanded to $1.25 from 75 cents a year ago. 

In the quarter, average loans increased to $945.9 billion from $926.6 billion and average deposit decreased to $1.35 trillion from $1.45 trillion from a year ago. 

Provision for credit losses rose sharply to $1.7 billion from $580 million a year ago, indicating growing worries about commercial real estate loans and higher credit card balances. 

The company repurchased 100.2 million shares for $4.0 billion in the second quarter. 

The company proposed to increase its quarterly dividend per share to 35 cents per from 30 cents a year ago. 

Third Inflation Report Indicates Cooling Trend, S&P 500 and Nasdaq Extend Weekly and Yearly Gains

Stocks on Wall Street advanced after banks reported better-than-expected earnings but market indexes lost early momentum. 

Market averages extended halted a 4-day rally as earnings season kicked off and investors focused on cooling inflation trend. 

JPMorgan Chase, Wells Fargo and Citigroup met or exceeded quarterly earnings estimates, fueling market advance in Friday's trading. 

Market averages opened higher for the fifth day in a row after inflation worries eased following three reports this week. 

Consumer price inflation dropped to 3% in June , wholesale inflation dropped to 0.1% and import prices dropped 6.1% after prices of petroleum products continued to decline.  

Wholesale price inflation declined for the eleventh month in a row and consumer price inflation dropped to the lowest level last seen since March 2021. 

Import price inflation also declined 6.1% from a year ago in June, supporting that price pressures are ebbing. 

Market averages sold off in the final hour of trading as investors focused on a sharp rise in credit loss reserves in the latest quarterly results of JPMorgan Chase. 

U.S. Indexes & Yields 

The S&P 500 index futures traded higher 0.3% to 4,521.33 and the Nasdaq Composite edged higher 0.4% to 14,191.93.

The yield on 2-year Treasury notes decreased to 4.70%, 10-year Treasury notes inched lower to 3.80% and 30-year Treasury bonds edged down to 3.91%. 

Crude oil decreased $0.81 to $76.10 a barrel and natural gas prices decreased 1 cent to $2.54 a thermal unit. 

Stock Movers 

Citigroup declined 2.1% to $46.68 despite the company reporting better-than-expected quarterly earnings.  

JPMorgan Chase gained 0.5% to $149.70  and the New York-based bank reported higher earnings on bond trading income.

Black Rock Inc declined 2.1% to $724.51 after the asset management company reported earnings ahead of market expectation and robust fund inflows. 

UnitedHealth Group soared 6.8% to $478.29 after the insurance company reported  better-than-expected earnings on lower-than-expected costs and rising premiums. 

The insurance company also lifted its annual outlook. 

Europe Movers: Ashmore, Ericsson, Nokia, SBB, Zoo Digital

European markets gained 4% this week after inflation and interest rates worries eased. 

The euro jumped to a 16-month high after the dollar eased on the expectations that the U.S. Federal Reserve may pause following steady decline in consumer and wholesale price inflation indexes. 

The DAX index decreased 0.2% to 16,103.98, the CAC-40 index advanced 0.3% to 7,394.75 and the FTSE 100 index increased 0.2% to 7,454.87.  

The yield on 10-year German Bunds inched higher to 2.44%, French bonds traded lower to 3.0%, the UK gilts edged up to 4.39% and Italian bonds increased to 4.14%.

Ericsson declined 9..9% to 52.73 kronor after the Swedish multinational company in the second quarter swung to a net loss of 0.6 billion kronor compared to a profit of 4.7 billion a year ago. 

Nokia Oyj plunged 10% to €3.54 after the Finnish telecom company lowered its annual earnings outlook. 

SBB AB plunged 11% to 5.34 kronor after the Swedish property company reported a wider-than-expected quarterly loss. 

Ashmore Group plc declined 6% to 203.80 pence after the UK-based asset management company reported a 3% decline in asset management. 

Zoo Digital Group Plc plunged 33% to 70.0 pence after the cloud services provider said revenue in the fiscal first quarter is likely to be lower than in the comparable period a year ago.