Shares of Netflix and Tesla are being punished by investors after they reported weak quarterly results. However, the Dow Jones continues its rally. In the eurozone, consumer sentiment improved slightly but remains low.
Weak quarterly results from market heavyweights Netflix and Tesla led to significant losses in US technology indices on Thursday. The electric car maker's shares plunged 9.7%, making it the worst performer on the Nasdaq. The streaming service's shares lost 8.4%. The Nasdaq Composite ended the session down 2.1% at 14’063.31. The S&P 500 also suffered from the weakness in technology stocks, losing 0.7% to 4534.87. Meanwhile, the Dow Jones continued its winning streak, rising for the ninth day in a row. The index was up 0.5% at 35’225.18.
Asian stock markets were mixed on the last trading day of the week. In Japan, the Nikkei lost 0.4% on Friday. In Hong Kong, the Hang Seng gained 0.7% and the Shanghai Composite was unchanged from the previous day.
In addition to the quarterly results, Thursday's calendar was packed with macro data. Business confidence in the manufacturing sector of Philadelphia recovered unexpectedly weakly in July. The so-called Philly Fed Index rose by 0.2 points to -13.5 points, as the Federal Reserve Bank of Philadelphia announced on Thursday. Analysts had expected an increase to -10.0 points. The barometer measures economic activity in the Philadelphia region, with a reading below zero signalling a contraction. Meanwhile, the US housing market remains tight. Existing home sales fell by 3.3% in June compared with the previous month. Year-on-year, they have fallen as much as 19%. Demand for housing is strong, but supply remains tight. This is reflected in home prices, which are at high levels across the country.
Consumer sentiment in the Eurozone improved slightly in July. The indicator rose by 1.0 point to -15.1 points compared to the previous month, the European Commission announced on Thursday. Analysts had expected an increase to -15.8 points. Consumer sentiment therefore remains well below the long-term average.
Contrary to earlier expectations, the eurozone narrowly avoided a recession in winter. This was revealed by the latest data from Eurostat on Thursday. According to the data, the European economy contracted by 0.1% in the final quarter of 2022. However, it stagnated in the first quarter of 2023. Initial estimates had pointed to a contraction of 0.1%. If the economy shrinks for two quarters in a row, economists speak of a technical recession. The situation in Germany is different: economic output in Europe's largest economy contracted by 0.5% in the fourth quarter of last year, followed by a further 0.3% slowdown at the start of this year.
Producer prices in Germany have developed somewhat more favourably. Prices at the producer level rose by 0.1% in June compared with the previous year, the Statistical Office reported on Thursday. This is the smallest increase since December 2020, and raises hopes that the pressure on consumer prices is also easing. Annual inflation in Germany stood at 6.4% in June.
Corporate news in focus: Norsk Hydro, Lonza, Sartorius, Schindler with Q2 earnings.
Economic data in focus: Retail Sales UK (8:00 CET).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.