European markets were sliding in early trade, roiled by a downturn in oil prices and tracking a downturn in US equity index futures after an earnings miss from Disney (NYSE:DIS). Haven assets saw renewed demand with gold and the yen both rising.
Weak bank stocks weighed on the FTSE, retracing some of the sharp gains made on Tuesday after better than expected earnings from Credit Suisse (SIX:CSGN). TUI (LON:TUIT) was the FTSE’s biggest faller after announcing the disposal of its ‘Specialist Group’ but a smaller loss in its six month update than a year ago.
Saudi Arabia’s state-owned oil giant ARAMCO has announced it will expand production this year, adding to the global supply glut. The increased production comes after a failed agreement to freeze output at a producer meeting last month and ahead of the company’s planned IPO.
The rise in the yen this year has received its first complaint from corporate Japan. Toyota (NYSE:TM) expects its first profit drop in 5yrs, largely in expectation of lower sales in the US and China where the less favourable exchange will make it less competitive. The profit warning has knocked Toyota shares lower despite the car giant reporting its third record profit in a row. Toyota is the first but unlikely to be the last Japanese multinational to warn of falling profits due to the stronger yen. Toyota; comments go a long way to explain the underperformance of the Japanese stock market this year.
Shares of Carlsberg (CO:CARLa) were amongst the biggest fallers in Europe with the company citing a decline in its China market as a reason for a bigger than expected fall in sales. The beer giant will close more breweries in China in response to the lower consumer demand. Heineken’s results are another indicator from corporations, including Apple (NASDAQ:AAPL) of slower demand in China that counter official figures suggesting only a moderate downturn in economic growth.
US stocks look set to open lower after Disney missed profit and revenue forecasts for first time in five years, leaving the media giant’s stock set to open down 6%. The box office hits have not proved enough to offset weaker results from its theme parks and cable TV business.
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.