Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Shell And Next Earnings Hit The FTSE As Sterling Drops

Published 04/05/2016, 12:30
Updated 03/08/2021, 16:15

Stock markets are lower again in early trading as corporate earnings and economic data continue to disappoint, dragging on the price of oil and broader sentiment.

A much bigger than expected slowdown in construction activity during April and poorly-received earnings from Royal Dutch Shell (LON:RDSa) and Next (LON:NXT) are pressuring the FTSE 100. Mining stocks continue to lead declines amid falling commodities which are still bearing the brunt of weak economic data from China.

Stock markets have been falling in the past few days amid mixed corporate earnings but yesterday’s sharp reversal higher in the US dollar, if sustained, could add to downside risks. Yesterday’s dollar strength is lagging the weakness in oil and commodity currencies which topped out last week.

The biggest risk to the current rally in equities is that oil and other commodity markets rollover and pull outperforming resource sectors down with them. Oil prices are weaker for fourth day on Wednesday but downside momentum appears to be slowing.

Services in the Eurozone slipped slightly in April according to the lattest PMI data but nonetheless continue to be the main driver of economic growth amid weakness in manufacturing. The British pound added to yesterday’s sharp drop after the UK construction PMI for April fell from 54.2 to 52.0 when expectations were for a more modest drop to 54.1

Shares of Royal Dutch Shell have fallen after it reported another huge quarterly decline in profits including a $1.4bn loss in its exploration and production business. Adjusted net income was ahead of expectations thanks to a bigger return in refining and trading as well as effective cost-cutting. Shell’s biggest risk is also its biggest opportunity; a dividend yield of 7% thanks to its higher debt burden following the BG merger.

US stocks look set for a lower open ahead of private payrolls and ISM non-manufacturing data and more Q1 earnings results. Weakness in the tech sector continues to weigh on the Nasdaq, despite Apple (NASDAQ:AAPL) snapping an eight-day losing streak.

Notable earnings before the US open: Priceline (NASDAQ:PCLN), Time Warner (NYSE:TWX)
Notable earnings after the close: Kraft (NASDAQ:KHC), Tesla (NASDAQ:TSLA), Twenty-First Century Fox (NASDAQ:FOX), Prudential (LON:PRU)

USA pre-opening levels
S&P 500: 14 points lower at 2,049
Dow Jones: 95 points lower at 17,655
Nasdaq 100: 30 points lower at 4,311

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.