Darren Sinden from educational provider Trade Uni discusses the latest market moves.
Yesterday was another indecisive day for major equity markets. The S&P 500 was flat on the day while the Nasdaq 100 eked out a small gain. Things were clearer in Europe, where all the main indices finished in the red. The biggest faller on the day was the Portuguese PSI, which lost 1.1%. The Swiss SMI lost 0.8% and the Italian MIB fell 0.6%. The Euro Stoxx 50 was unchanged but internally there was divergence in the performance of its constituents. Database and software maker SAP rose by 2.1%, becoming Europe's largest technology company by market cap in the process, displacing ASML which itself put on 1.4%. Airbus was another gainer, up by 1.75%.
There were many stocks going the other way, however. Munich Re continued to sell off, down another 2.8%. In the last few days, the stock has fallen below its 20- and 50-day moving averages and could test 8 October’s lows at €457. US broker Jefferies downgraded the stock from buy to hold, saying it saw little upside in the stock price, which the market seems to have taken to heart. Italian multinational Enel was another faller, losing 2.3% on the session.
There were plenty of mixed signals in the US at a stock level. Tobacco giant Philip Morris rallied by almost 10.5% on better-than-expected earnings and higher guidance, as did General Motors which put on 9.8%. Both companies attracted positive broker comments, with JPMorgan saying that General Motors “is on a roll”, while Deutsche Bank raised its price target for Phillip Morris by $7.
However, there were significant losers too. GE Aerospace fell by just over 9% after a narrow earnings beat. The company downgraded its full-year earnings outlook, which has been impeded by events at Boeing, one of its major customers. PulteGroup shed 7.24% as it reported earnings; the numbers were ahead of expectations, but mortgage rates in the US have risen once more, and a 30-year fixed rate loan now carries an interest of 7.26%, versus just 6.06% just one month ago. As such, there’s a sense that it's been better to travel than to arrive in PulteGroup, which is up by almost 30% year-to-date.
Crude oil is trading lower this morning in Europe, down by 0.5%, though still up by more than 1% over the last week. Gold has opened marginally higher, though silver is trading modestly lower, as is copper. US 10-year yields are fractionally higher this morning at 4.232%; borrowing costs in the US, as measured by this benchmark, have risen by 50 basis points over the last month. Overnight money market rates in the US have fallen at the short end in recent weeks, but looking at one-year money and beyond, rates have moved up along the curve in the last month, which is an important signal.
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