Stock Market Review (US Open) – Equities tank ahead of US open amid strong euro; Italian bourse underperforms peers
Posted on August 23, 2017 at 1:49 pm GMTMaja Rakic, XM Investment Research Desk
As today’s trading progressed European bourses reversed into red territory, erasing early gains. The upside beat in the eurozone’s manufacturing PMI failed to lift the pan-European benchmark index. The STOXX 600 fell 0.40%, with the banks heavy-weight Italian FTSE MIB faring the worst. In the US, the Dow Jones Industrial Average index fell 0.34%, the S&P 500 slid 0.44% and the NASDAQ Composite tumbled 0.54%.
The financial sector dragged blue chip stocks lower in Europe, with the STOXX 50 index sliding 0.41% ahead of the US open.
The Italian FTSE MIB underperformed its country peers, falling 0.85% ahead of the US open, followed by the Spanish IBEX (down 0.64%). Heavy export dependent, Germany’s DAX fell relatively less, down 0.33%. The FTSE 100 fell 0.11%, dragged by the share price of WPP.
WPP, the world’s largest advertising group, cut its revenue outlook following a miss in first half targets due to weaker demand from consumer goods clients and weak trading in the US. The company’s share price plunged 10.29% and was the worst performer in the STOXX 600 index. The STOXX media index tumbled 2.29% on the day.
Among the rare outperformers in today’s trading, Fiat Chrysler was among the leaders (up 3.40%) on the announcement that the company plans to spin off parts of its business (Maserati and Alfa Romeo) and focus on the remaining brands. German potash miner K+S (up 3.12%) rose on news that activist Elliott Management might increase its interest in the company. Tesco’s shares also gained, up 1.98%.
Lowe’s, the US home improvement company published its quarterly results that disappointed investors and pushed its share price 6% lower in pre-market trading. An additional pressure on the company’ stock price was upbeat results from its bigger competitor, Home Depot that released results last week. Lowe’s adjusted profits missed estimates while same-store-sales came in at 4.5%, worse than what Home Depot recorded (6.3% versus expectations of 4.9%).
Major indices in the US corrected lower, weighed by the President’s remarks on a potential government shutdown if no funding is provided for the wall between the US and Mexico. President Trump also signaled a potential exit from the NAFTA agreement.