A Down Day For Europe And Asia Due To Weaker Earnings

Asian markets closed lower yesterday by wiping off some of their gains which were made yesterday. The trading session took its momentum from the US markets which closed mix on the back of assorted earnings report despite a strong economic data. The New Homes Sales- economic data came in at 497K while the forecast was for 482, which was great news for home builders and for the economy.

However, this good news lost its importance due to a weaker bag of earning’s report released yesterday. Moreover, investors were further disappointed in Asia when Beijing announced new stimulus measures which were far off from expectations. The country is facing a major growth problem and under the current stimulus policies, it may be difficult for China to maintain its GDP target of 7.5% for 2013.

The Nikkei Index was the worst performing index during the session which closed with a loss of -1.14%. The index is down nearly by -0.36% for the past five days. The Shanghai index was the second worst performer and closed with a loss of -0.61%. The Hang Seng index also closed in red territory with a loss of -0.31%.

Coal miners and metals were among of the biggest losers during the session in Hong Kong and shares of CITIC Pacific dropped nearly by 1.3%. Zijing Mining Group Co and Zijin both dropped nearly by -2.8% and 0.8% respectively. However, on the brighter side, the railway announcement by China had a positive impact on the transport sector and shares of China Railway Corporation soared nearly by 3.7%.

European stock markets are trading lower during the early hours of trading. Investors are focused on the major economic data- GDP number for the second quarter for the British economy. A weaker number could push the FTSE 100 lower further which is already trading lower by almost -0.47%. The MPC voters will look at this reading very closely as this will give a real picture about the strength of the economy.

The DAX Index is the worst performing index during the session which is trading down with a loss of -0.44%. However, the index is up nearly 1.02% for the past five days. The FTSE MIB index is the second worst performer and is also trading down with a loss of -0.33%. The CAC40 and the FTSE 100 are also trading lower with a loss of -0.09%, and -0.29% respectively.

Orange, a French telecommunication company is trading lower by -4.9% on the back of a 38% fall in its first half income. BASF SE is under pressure due to disappointing earning’s result and is trading down by -3.9%.

DISCLOSURE & DISCLAIMER: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.

by Naeem Aslam