Caution on Global Markets, Company Results Are Not Impressive

Last week, trading on global markets was cautious as, although quarterly business results from companies were better than expected, they were not good enough to stimulate a significant rise in stock prices.

On Wall Street last week, the Dow Jones increased by 0.1 percent to 15,558 points, while the Nasdaq index rose by 0.7 percent to 3,613 points. The S&P 500, on the other hand, fell by 0.03 percent to 1,691 points, marking its first decline after four weeks of continuous growth.

Investor focus last week was on the business results of companies for the second quarter. Most companies reported better-than-expected business results, but expectations were very low, so this did not manage to stimulate a significant rise in stock prices.

In a Thomson Reuters survey, analysts expect that companies in the S&P 500 index will achieve a profit growth of 4.1 percent in the second quarter compared to the same period last year, while revenues could increase by 1.6 percent.

So far, about 260 companies from the S&P 500 index have released their business reports, with 67.6 percent exceeding analysts’ expectations regarding earnings, and 56 percent regarding revenues.

“Company earnings are not as bad as investors feared, and political issues are not currently in the foreground. This could, however, change quickly, but one should enjoy the summer rise in prices while it lasts,” says Matt McCormick, portfolio manager at Bahl & Gaynor.

A positive influence on the markets was also an article in the Wall Street Journal suggesting that Fed leaders might prepare a statement at the upcoming meeting indicating that they intend to keep record-low key interest rates for an extended period.

However, most analysts still believe that the U.S. central bank will begin to reduce the amounts of stimulus monetary programs as early as September.

Due to all this, investors are cautious, and trading volume was below average. On Wall Street, NYSE MKT, and Nasdaq, less than 6 billion shares changed hands daily, while the average daily volume this year is 6.4 billion.

European markets also traded cautiously last week. The London FTSE index fell by 1.1 percent to 6,554 points, while the Frankfurt DAX decreased by 1 percent to 8,244 points. The Paris CAC, on the other hand, rose by 1.1 percent to 3,968 points.

On the Tokyo Stock Exchange, the Nikkei index fell by 3.2 percent last week to 14,129 points, marking its first decline after five weeks of continuous growth.