The Thursday Market Minute

  • Global stocks slide as U.S. earnings weakness, as well as a notable slump in Japanese exports, signals further concern for the near-term fate of the world economy.
  • Netflix posted its first dip in U.S. subscribers in 8 years last night, as well as a big miss in global customer additions, proving a poor start to second quarter FAANG earnings and rattling the tech sector.
  • U.S. equity futures suggest a third session of declines on Wall Street ahead of earnings from UnitedHealth, Honeywell and Morgan Stanley before the bell and Microsoft following the close of trading. Weekly jobless claims data is also expected at 8:30 am Eastern time alongside the Philadelphia Fed survey report.

Market Snapshot

U.S. equity futures are pointing to a third day of declines on Wall Street Thursday as investors react to weaker-than-expected earnings in the tech and industrial sectors and signal increasing concern for the fate of U.S.-China trade talks.

Netflix (NFLX) - Get Report , the online video streaming service and the first of the so-called FAANG complex stocks to report second quarter earnings this season, disappointed investors with its first fall in U.S subscribers in eight years, as well as a notable miss in new additions from markets around the world in it quarterly report after the close of trading yesterday.

Those figures pushed shares sharply lower in pre-market trading Thursday, and were coupled with weaker-than-expected earnings, and a gloomy 2019 forecast, from rail operator CSX Corp. (CSX) - Get Report yesterday, which dragged transport stock on the Dow lower and highlighted the impact of the year-long U.S.-China trade dispute on the domestic economy.

That impact was echoed in data from Japan early Thursday, where a benchmark survey of manufacturing and business sentiment slumped to a three-year low and exports fell for the eighth consecutive month, sending the Nikkei 225 into a 2% tailspin.

U.S. markets look a bit more resilient in early futures trading Thursday, but are nonetheless expected to fall for a third straight session as contracts tied to the Dow Jones Industrial Average are marked 4 points higher and those linked to the S&P 500 indicate a 3.4 point pullback. Nasdaq Composite futures are suggesting a 33 point decline for the tech-focused benchmark.

Honeywell Inc. (HON) - Get Report posted stronger-than-expected second quarter earnings Thursday, and boosted its full-year profit guidance, as it aerospace division recorded double-digit sales growth thanks to strength in its U.S. and international defense and space business.

UnitedHealth Group (UNH) - Get Report posted stronger-than-expected second quarter earnings Thursday, and boosted its full-year outlook, as medicare & retirement, OptumRx and OptumHealth posted double-digit revenue growth.

Asia stocks were pulled lower by the weak Japan exports, as well as a Wall Street Journal that suggested trade negotiations between Washington and Beijing had stalled amid a disagreement on how to allow U.S. companies to export tech goods to China-backed Huawei Technologies.

European stocks were also weaker at the start of trading in Frankfurt, with the Stoxx 600 falling 0.4% on the back of weak industrial and basic resource stocks, while Britain's FTSE 100 slumped 0.44% as the pound crept modestly higher, to 1.2439 against the U.S. dollar, after hitting a 27-month low earlier in the week. 

SAP SE (SAP) - Get Report shares plunged in early European trading after the cloud and business software firm posted weaker-than-expected second quarter earnings linked in part to global trade tensions.

SAP shares were marked 8% lower in early Frankfurt trading to change hands at €112.01 each, while the broader European tech sector slumped 2.25%

Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, drifted 0.03% higher in overnight trading even as bond yields declined in safe-haven trading, with investors preferring positions in U.S. Treasury notes and the yen.

Global oil prices were modestly firmer in the early European session, after falling more than 1% yesterday following a bigger-than-expected build in U.S. gasoline and distillate supplies, according to the Energy Information Administration, which offset a 3.1 million fall in domestic crude stocks.

Brent crude contracts for September delivery, the global benchmark, were seen 60 cents higher from their Wednesday close and changing hands at $64.26 per barrel in early European trading while WTI contracts for August, which are more tightly linked to U.S. gas prices, were marked 46 cents higher at $57.24 per barrel.

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