Markets retreated on disappointing corporate reports - 22.7.2015

US stock markets declined on Tuesday on weaker than expected quarterly reports. The dollar fell as investors booked gains after four-day winning streak. The ICE US dollar index, measuring the value of six-currency basket, was down 0.7%. The index has risen 8.5% since the beginning of the year. The Dow Jones Industrial Average dropped 1%, S&P 500 fell 0.4%, with nine of its 10 main sectors ending lower. Nasdaq Composite retreated from Monday’s record high, closing 0.2% lower. IBM's shares fell 5.9 % after disappointing second-quarter report showed company's revenue fell for the 13th consecutive quarter. United Technologies tumbled 7.9 % after the company cut its full-year profit outlook. Apple fell 8.8% in after-hours trading after company’s revenue forecast for the current period missed analysts’ projections. Investors are cautious as revenues are stagnant with valuations at record highs. Thus, S&P 500 trades at 16.9 times forward 12 months earnings, above the 10-year median of 14.7 times, whereas second-quarter earnings of S&P 500 companies are expected to fall 1.9%. Today Coca-Cola , Boeing , Qualcomm Inc., American Express and SanDisk Corp will report quarterly earnings. At 12:00 CET mortgage applications will be released in US. At 14:00 CET April Housing Price Index will be published. The tentative outlook is positive. At 15:00 CET June existing home sales will be released. The tentative outlook is positive.

European stocks retreated on Tuesday after nine-session wins as healthcare, technology and telecom stocks fell. The euro gained about 1% against the dollar, hurting Europe’s exporters. Germany’s DAX fell 1.1%, France’s CAC 40 lost 0.7%. Swiss drug maker Novartis AG lost 2.2% after reporting 32% fall in second-quarter profit from a year ago. The Finnish paper producer Stora Enso sank 8.3% after it reported lower than expected profits due to higher costs and production problems. Shares of Swedish telecom operator Tele2 AB slumped 7.1% as the company reported second-quarter profits less than half as much as a year ago. Greek government submitted legislation to parliament related to reforms in civil justice system, bankruptcy laws, as well as austerity measures. The parliament has to vote on them today for the third bailout negotiation to start between Greece and its creditors. The Greek stock market remained closed. No important economic data are expected today in euro-zone. At 10:30 CET Monetary Policy Committee meeting minutes will be released in UK.

Nikkei fell 1.1% today as yen strengthened and US equities declined overnight. Falling Apple shares undermined investor confidence in Apple related stocks, with Murata Manufacturing tumbling 6.4 %, Foster Electric falling 2.5 %, and TDK Corp dropping 3.0 %. Tomorrow at 00:50 CET June trade balance will be released in Japan. The tentative outlook is positive.

Today at 22:00 CET the Reserve Bank of New Zealand interest rate decision and statement will be released. The central bank is expected to cut the interest rate 0.25% to 3.0%.

Oil prices are falling today after closing higher for first time in five sessions on Tuesday on back of weaker dollar. Traders are waiting for crude oil inventory data from US which will be released today at 15:30 CET, a 1.6 million-barrel drop in stockpiles is expected.

Gold prices are falling for tenth session, breaking below $1100 an ounce as investor sentiment toward the safe haven metal turned bearish as China’s market declined and expectations grew the Federal Reserve will raise interest rates this year.