Global stocks were weighed down by massive losses and heightened volatility on Wall Street last week. A spike in yearly wage increases triggered inflationary concerns and boosted bond yields, leading to U.S. stocks entering correction territory. These events had a widespread impact with stocks across global bourses incurring losses.
Inflationary Concerns Drag STOXX Lower
Markets across Europe finished in the red last Monday. Investors were weighed down by concerns that inflation would increase at a faster-than-expected pace. The STOXX 600 lost 1.5% with nearly all major sectors and exchanges closing with losses. A 2.9% annual increase in U.S. wages was the likely trigger for worldwide losses. Financial services' stocks were the worst losers for the day and the sector declined 2%.
The STOXX 600 declined 2.3% last Tuesday, with nearly all major exchanges and sectors finishing in the red. However, this was something of a recovery for European stocks after they declined 3% in early trading. Insurance and bank stocks were the worst affected, losing more than 2.7% over the session.
Stocks across Europe finished in the green last Wednesday even as global markets tried to overcome massive volatility experienced over previous sessions. The STOXX 600 gained 2.1%, with nearly all sectors and markets closing in the black. Energy stocks were the strongest performers for the day, increasing more than 2.4%, following encouraging earnings.
A decline in tech stocks dragged Europe’s markets lower last Thursday. The STOXX 600 lost nearly 1.6% with nearly all major sectors closing in the red. All major exchanges also finished in the negative zone with the DAX losing more than 2.6% to emerge as the worst sufferer of the session.
The STOXX 600 declined 1.5% last Friday with all sectors closing in the red. Investors continued to be weighed down by a spike in volatility and a likely increase in borrowing costs. Over last week, the FTSE 100, CAC 40 and the DAX declined 4.2%, 5.5% and 5.3%, respectively.
Wall Street’s Losses Weigh on Asia’s Stocks
Stocks across Asia finished in the red last Monday after U.S. stocks suffered a sudden downturn following a spurt in wage growth. The ASX 200 declined 1.6% with most sectors closing lower. The Nikkei 225, Topix and Kospi lost 2.6%, 2.2% and 1.3%, respectively. China’s markets ended mixed with the Shanghai Composite recovering from early losses to close 0.7% higher. The Shenzhen Composite and the Hang Seng lost 0.8% and 1.1%, respectively.
Losses on Wall Street led to Asia’s markets ending with losses last Tuesday. The Nikkei 225 declined 4.7% with all major sectors closing with losses. The Kospi and the ASX 200 declined 1.5% and 3.2%, respectively. The Shanghai Composite and the Shenzhen Composite lost 3.4% and 4.4%, respectively. The blue-chip CSI 300 finished 2.9% lower.
Several indexes across Asia lost out on early gains to close in the red last Wednesday. Losses came about even though Wall Street finished in the green over the last trading session. The Nikkei 225 ended marginally above the flat line after gaining 3% earlier in the session. The Kospi lost 2.3% while the ASX 200 added 0.8%. The Shanghai Composite and the Shenzhen Composite lost 1.8% and 0.7%, respectively.
The Nikkei 225 rebounded last Thursday ending up 1.1% even as indexes across the region finished in the green. The Kospi and the ASX 200 increased 0.5% and 0.2%, respectively. However, the Shanghai Composite and the Shenzhen Composite lost 1.4% and 1.1%, respectively. The blue chip CSI 300 declined nearly 1%.
Losses on Wall Street in the preceding session led to Asia’s stocks closing in the red last Friday. The Nikkei 225 declined 2.3% while the Kospi and the ASX 200 lost 1.8% and 1%, respectively. The Shanghai Composite, the Shenzhen Composite and the CSI 300 declined 4%, 3.2% and 4.3%, respectively.
Bovespa Dragged Lower by Global Volatility
Equity markets across Latin America finished in the red last Monday. Losses on Wall Street, following the release of better than expected jobs data was the primary trigger for this decline. However, the Bovespa still closed almost flat, supported by an increase in shares of Vale SA (VALE - Free Report) .
Stocks across the region overcame global market volatility last Tuesday, bolstered by expectations that global growth would continue to firm up. The Bovespa gained 2.5%, boosted by shares of Itaú Unibanco Holding SA (ITUB - Free Report) , which gained after revealing that it was hiking its dividend. Mexico's S&P/BMV IPC index lost 2.2%.
Stocks in Mexico declined again last Wednesday, following wide fluctuations on Wall Street. The S&P/BMV IPC index lost 0.6%. The Bovespa declined 1.3%, dragged down by shares of Petrobras (PBR - Free Report) which in turn were weighed down by falling oil prices.
Markets across the region experienced significant losses last Thursday. Global wariness following the selloff in Europe and the United States continued to weigh on the region’s bourses. The S&P/BMV IPC index and the Bovespa lost 2.3% and 1.5%, respectively. Chile’s IPSA and Colombia’s IGBC indexes lost more than 1.7% each.
Global equity losses failed to affect Latin America’s stocks last Friday. Trading volumes remained low in Brazil ahead of the Carnival holidays. The Bovespa closed nearly flat.
Stocks in the News
BP p.l.c. (BP - Free Report) reported fourth-quarter adjusted earnings of 64 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line missed the Zacks Consensus Estimate of 66 cents but was significantly higher than year-ago quarter’s 13 cents. BP has a Zacks Rank #3 (Hold).
Total revenues were $70,022 million in the quarter, up from $52,121 million in the year-ago quarter. In the fourth quarter, total production inched up 18% year over year to 2.581 million barrels of oil equivalent per day (MMBoe/d). Segmental profits improved to $1,474 million from $877 million in the year-ago quarter, courtesy of higher refinery throughput.
Ramp up of key developments convinced BP to project higher year-over-year production through 2018. For the January-to-March quarter of 2018, the integrated energy player expects output to remain in line sequentially. (Read: BP plc Q4 Earnings Miss Estimates, Skyrocket Y/Y)
Toyota Motor Corporation’s (TM - Free Report) operating income soared 54% to ¥673.6 billion ($5.96 billion) in third-quarter fiscal 2018 (ended Dec 31, 2017). Also, the Japanese automaker reported net income of ¥970.7 billion ($8.6 billion) in the quarter in comparison to ¥506.8 billion ($4.7 billion) in the prior-year quarter. Toyota has a Zacks Rank #3.
Net revenues increased 7.4% year over year to ¥7.61 trillion ($67.3 billion) in the quarter. The Zacks Consensus Estimate for revenue was $65.11 billion. Toyota expects its total retail unit vehicle sales for fiscal 2018 at roughly 10.3 million units compared with the 10.25 million units recorded in fiscal 2017.
The company projects net revenues at ¥29 trillion in comparison to its previous assumption of ¥28.5 trillion, thus reflecting a 5.1% gain over fiscal 2017. Also, it anticipates its operating income for fiscal 2018 at ¥2.2 trillion, reflecting a 10.3% increase from the previous year. (Read: Toyota Q3 Operating Income Surges 54%, Revenues Rise)
TOTAL S.A. (TOT - Free Report) reported fourth-quarter 2017 operating earnings of $1.10 per share (€0.94 per share), which beat the Zacks Consensus Estimate of $1.06 by 3.8%. The bottom line improved 15% from the year-ago figure of 96 cents (€0.89 per share). Total revenues came in at $47.35 billion, up 12.0% from $42.27 billion generated in the year-ago quarter.
Total hydrocarbon production during the fourth quarter averaged 2,613 thousand barrels of oil equivalent per day, up 6% year over year. In the fourth quarter, the realized price for Brent was up 24% to $61.3 per barrel from $49.3 in the year-ago quarter.
Zacks Rank #2 (Buy) TOTAL’s upstream production is expected to increase 6% in 2018, in sync with its objective to grow 5% per year on average between 2016 and 2020. (Read: TOTAL Tops Q4 Earnings on Higher Oil Prices & Output)
Statoil ASA (STO - Free Report) posted fourth-quarter 2017 adjusted earnings of 39 cents per ADR, which beat the Zacks Consensus Estimate of 34 cents. The company reported adjusted loss of 2 cents per share in the year-earlier quarter. In the fourth quarter, total revenues improved 13% year over year to $17.1 billion. In 2017, total revenues jumped 33.4% year over year to $61.2 billion.
The company’s board of directors proposed to increase dividend for the fourth quarter by 4.5% to 23 cents per share. However, it is subject to approval in the annual general meeting. The stock has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GlaxoSmithKline plc (GSK - Free Report) reported core earnings of 72 cents per ADS in the fourth quarter of 2017, surpassing the Zacks Consensus Estimate of 69 cents. The bottom line was up 11% at constant exchange rate (CER) compared with the year-ago figure.
Quarterly revenues rose 4% at CER to $10.3 billion (£7.6 billion), driven by strong segmental performances in Consumer Healthcare, Pharmaceuticals and Vaccines. The top line also outpaced the Zacks Consensus Estimate of $9.9 billion.
Full-year sales gained 3% year over year to $39.3 billion (£30.2 billion). However, the metric marginally missed the Zacks Consensus Estimate of $39.5 billion. The 2017 earnings of $2.9 per share were in line with the Zacks Consensus Estimate. The full-year bottom line reflects 4% growth from the year-ago figure. (Read: Glaxo Earnings and Revenues Surpass Estimates in Q4)
Sanofi (SNY - Free Report) reported fourth-quarter 2017 earnings of 63 cents per ADS, which missed the Zacks Consensus Estimate of 69 cents. Earnings declined 15.2% on a reported basis. At constant currency rates (CER), earnings declined 8.8%.Sanofi has a Zacks Rank #4 (Sell)
Fourth-quarter net sales declined 2% on a reported basis to almost $10.26 billion (€8.69 billion). Sales also missed the Zacks Consensus Estimate of $10.38 billion. Unfavorable exchange rate movements hurt sales by 6.1%. At CER, sales rose 4.1% year over year.
Full-year 2017 earnings of $3.13 per ADS also missed the Zacks Consensus Estimate of $3.34 per share. Net sales rose 3.6% on a reported basis and 5.6% at CER to almost $39.6 billion (€35.06 billion). Sales, however, missed the Zacks Consensus Estimate of $42.3 billion. (Read: Sanofi Q4 Earnings Lag on Weak Diabetes/Vaccines Sales)
Performance of Leading Foreign Stocks
The table given below shows the price movements of 10 of the largest stocks listed on indexes worldwide, over the last five days and during the last six months.
Next Week’s Outlook
Global stock movements were largely guided by events on Wall Street last week. U.S. stocks continue to suffer from heightened volatility and most market watchers believe more losses lie ahead for the markets. Such a scenario is likely to have a significant impact on stocks on all major global exchanges. Against this backdrop, investors will probably have to traverse troubled waters over the next few weeks of trading.
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