Stock Market Focuses Attention on the Earnings Season on Both Sides of the World

Wall Street opened completely flat this morning, with shares of Amazon (AMZN) gaining about 16% after yesterday's results. European shares fell today dragged down by disappointing earnings reports as the satellite operator SES or BASF chemical, as well as negative data on industrial production in China. As a consequence, Asian markets ended with losses in today's session, with the most pronounced movement registered in the China's Shanghai Composite, while the Germany's DAX 30 index was the one with the hardest hit in Europe.

China Manufacturing PMI Slumped. In China, manufacturing activity tumbled to 15-month lows, increasing investor's concerns, at a time when the world's second-largest economy faces a general weakening.

The Preliminary Purchasing Managers' Index (PMI) produced by Caixin / Markit fell to 48.2, the lowest reading since April last year and the fifth consecutive month below the 50 mark, which is the level that separates growth from contraction.

Shares of Amazon (AMZN) Jumped. On Wall Street, stocks achieved losses during trading on Friday with the main indexes fell about 1%. Amazon presented its quarterly results on Thursday at the end of the session, which have widely exceeded expectations in both revenue and earnings, driven by growth in the U.S. market and the business of cloud computing. The stock closed at $529.42, an increase of 9.8%, which makes the online store's market cap greater than Wal-Mart (WMT).

Greece Appears to be No Longer a Problem. After the approval of the second package of austerity measures, negotiations start on the third bailout requested by the Hellenic country. The arrival in Greece of the representatives of the three international lending institutions -the International Monetary Fund, the European Central Bank and the European Union - and the authorities of the European Stability Mechanism is to start the negotiations of a long-term agreement. Despite this, Greece continues to be a country whose economy shrank by a quarter during 5 years of crisis and where unemployment exceeds 25%.

Falling Commodities Prices. The fall in prices of metals such as gold, copper, zinc, platinum and aluminum is causing Mr. Market begins to start worrying about it. This situation could be more important than the recent crisis in Greece and the volatility in the Chinese stock market. The spot price of gold reached a new five-year low during the Asian session of today and trade around the $1,083 per ounce, 4.5% less than a week ago, with expectations that the U.S. Federal Reserve will increase interest rates soon.

Published on Jul 24, 2015
By Omar Venerio
Capital Markets, Derivatives and Financial Management Professor, Master in Finance and CFA candidate. I am an independent trader of stocks and options and passionate about the stock market.

Copyrighted 2016. Content published with author's permission.

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