Global Stocks Mixed, U.S. Futures Soften as Earnings, Oil, Rates Cloud Sentiment

Know These Stats for Thursday's Trading Session

  • Industrial stocks have had a rough week after Caterpillar's (CAT) comments on demand provoked the bears. It's not shocking investors would react negatively given their high expectations for the industrials patch. Points out Yardeni Research, "Revenue and earnings growth rates for the [industrials] sector are expected to be robust. Analysts' consensus forecasts call for a 6.5% jump in revenues this year and 4.9% next year. An 18.5% improvement in earnings is expected this year, followed by a 12.6% gain next year. The sector's earnings have enjoyed strong upward revisions in recent month. And while the sector's forward P/E did look a little peakish earlier this year at 19.5, it has subsequently dropped back to 17.1, leaving it high relative to history but not overly so." Via @BrianSozzi

Market Snapshot

Global stocks were mixed Thursday, while U.S. equity futures edged modestly higher, as investors continue to sift through a volatile corporate earnings season and re-set expectations for profit growth amid rising bond yields, surging commodity prices and renewed concern over global smartphone and semiconductor demand.

Europe's Stoxx 600 index, the region's broadest measure of share prices, gained 0.44% by mid-morning in Frankfurt as benchmarks around the region steadily improved amid a busy session for corporate earnings on the Continent.  European automakers posted solid gains Thursday amid speculation that China is preparing to slash tariffs on imported cars as the government seeks to ease tensions with the United States and avoid a damaging global trade war.

Volkswagen AG (VLKAY) , the world's second largest carmarker, rose 2% in Frankfurt trading  as rival BMW AG (BMWYY) (+1.07%)  outpaced the DAX performance index and the Stoxx 600 Automobiles and Parts Index, the sector benchmark gained 0.8% in the opening hours of European trading.

Britain's FTSE 100 lagged its European peers, however, after disappointing earnings from benchmark heavyweights Royal Dutch Shell (RDS.B) and Barclays plc (BCS) held the index to an early 0.27% gain.

Deutsche Bank AG (DB)  shares were a notable early mover, falling as much as 3% before recovering to a 0.05% gain after it said it's planning "significant" job cuts for its global investment banking division, including a retreat from some non-European markets, as it moves to slash costs and trim its balance sheet under new CEO Christian Sewing.

U.S. equity futures were modestly higher in early European trading, after the Dow Jones Industrial Average snapped its five-day losing streak last night and tech investors cheered Facebook Inc.'s (FB) blowout first quarter, with contracts tied to the average rising 44 points and those linked to the broader S&P 500 marked 6 points, or 0.18%, to the upside. Nasdaq futures gained 39 points. 

Facebook shares are set for their biggest gain in nearly two years Thursday after the social media giant's first quarter earnings showed little impact from its recent data scandals and suggested changes to its newsfeed haven't discouraged users from joining the platform.

Zuckerberg saves the market, for now.
Zuckerberg saves the market, for now.

Action Alerts PLUS holding Facebook shares were marked 6.25% higher in pre-market trading in New York, indicating an opening bell price of $169.67 each, a move that would take the stock to the highest level in a month and trims its year-to-date decline to 9.1%

Thursday's session offers another busy slate of corporate results, with first quarter numbers expected from Microsoft (MSFT) , Amazon Inc. (AMZN) , Bristol Myers Squibb (BMY) , Conoco Phillips (COP) , General Motors GM, FiatChrysler (FCAU) , American Airlines (AAL) and PepsiCo (PEP) . Microsoft, Amazon and PepsiCo are holdings in Action Alerts PLUS.

TheStreet's Executive Editor Brian Sozzi reports that PepsiCo's quarter was mixed, at best.

Overnight in Asia, stocks were mixed despite an optimistic tone that flowed from Facebook's stronger-than-expected first quarter earnings and record profits from Samsung Electronics. The region-wide MSCI Asia ex-Japan index falling 0.19% and Japan's benchmark Nikkei 225 gaining 0.47%.

The MSCI was held down by a 1.35% slide for China's Shanghai Composite, which continues to tumble amid reports that New York state prosecutors are probing tech conglomerate Huawei for possible violations of U.S. sanctions on Iran.

Samsung Electronics (SSNLF) , the world's biggest smartphone and chipmaker, cautioned investors that weaker global demand would likely result in "stagnant" sales of its flaghship models even as it posted record first quarter profits. Samsung shares gained 3.41% in Seoul Thursday to close at 2.606 trillion won each, a move that edges the stock into positive territory for the year.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, rose 0.05% to 91.20, the highest since early January, as benchmark 10-year bond yields held at 3.03% in overnight trading, the highest since 2014, amid speculation that higher commodity prices would lead to faster inflation and a quicker reaction on rate increases from the U.S. Federal Reserve.

Global oil markets continued to press higher in early European trading, with investors focusing on geopolitical tensions and the prospect of renewed sanctions on Iran next month after French President Emmanuel Macron appeared unable to convince U.S. President Donald Trump that the current nuclear treaty with the Persian Gulf nation was important to maintain.

#Oil prices rise, as the US looks eager to exit the #Iran nuclear deal! pic.twitter.com/gNXk3vPdt5

— jeroen blokland (@jsblokland) April 26, 2018

Brent crude futures contracts for June delivery, the global benchmark, were seen 14 cents higher from their Wednesday close and changing hands at $74.14 per barrel while WTI contracts for the same month added 6 cents a barrel to $68.11. 

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