Global Stocks Mixed, US Futures Soften as Earnings, Oil, Rates Cloud Sentiment

April 26, 2018

New York (Apr 26)  Industrial stocks have had a rough week after Caterpillar's (CAT) comments on demand provoked the bears. It's not shocking investors would react negatively given their high expectations for the industrials patch. Points out Yardeni Research, "Revenue and earnings growth rates for the [industrials] sector are expected to be robust. Analysts' consensus forecasts call for a 6.5% jump in revenues this year and 4.9% next year. An 18.5% improvement in earnings is expected this year, followed by a 12.6% gain next year. The sector's earnings have enjoyed strong upward revisions in recent month. And while the sector's forward P/E did look a little peakish earlier this year at 19.5, it has subsequently dropped back to 17.1, leaving it high relative to history but not overly so." Via @BrianSozzi

Market Snapshot

Global stocks were mixed Thursday, while U.S. equity futures edged modestly higher, as investors continue to sift through a volatile corporate earnings season and re-set expectations for profit growth amid rising bond yields, surging commodity prices and renewed concern over global smartphone and semiconductor demand.

Europe's Stoxx 600 index, the region's broadest measure of share prices, gained 0.44% by mid-morning in Frankfurt as benchmarks around the region steadily improved amid a busy session for corporate earnings on the Continent.  European automakers posted solid gains Thursday amid speculation that China is preparing to slash tariffs on imported cars as the government seeks to ease tensions with the United States and avoid a damaging global trade war.

Volkswagen AG (VLKAY) , the world's second largest carmarker, rose 2% in Frankfurt trading  as rival BMW AG (BMWYY) (+1.07%)  outpaced the DAX performance index and the Stoxx 600 Automobiles and Parts Index, the sector benchmark gained 0.8% in the opening hours of European trading.

Britain's FTSE 100 lagged its European peers, however, after disappointing earnings from benchmark heavyweights Royal Dutch Shell (RDS.B) and Barclays plc (BCS) held the index to an early 0.27% gain.

Deutsche Bank AG (DB)  shares were a notable early mover, falling as much as 3% before recovering to a 0.05% gain after it said it's planning "significant" job cuts for its global investment banking division, including a retreat from some non-European markets, as it moves to slash costs and trim its balance sheet under new CEO Christian Sewing.

U.S. equity futures were modestly higher in early European trading, after the Dow Jones Industrial Average  snapped its five-day losing streak last night and tech investors cheered Facebook Inc.'s (FB) blowout first quarter, with contracts tied to the average rising 44 points and those linked to the broader S&P 500  marked 6 points, or 0.18%, to the upside. Nasdaq futures gained 39 points.

Facebook shares are set for their biggest gain in nearly two years Thursday after the social media giant's first quarter earnings showed little impact from its recent data scandals and suggested changes to its newsfeed haven't discouraged users from joining the platform.


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