A challenging quarter

European stock markets rose for a second day in a row on Tuesday, helped by gains at sportswear group Adidas and British-based bank Barclays, as investors waiting on word from the US Federal Reserve on what’s next in monetary policy. Wall Street was lower though, as shares in Apple sold off sharply after the world’s largest company by market value delivered quarterly results that disappointed investors. Asian markets also closed lower, as investors exercised caution ahead of a Bank of Japan decision due on Thursday.

In the financial industry, Barclays Bank led the way with gains. Although the bank posted a slump in first-quarter profits, the bank’s chief executive Jes Stanley said the lender is working on improving returns and accelerating the disposal of “noncore” businesses. Other bank stocks were trading lower. Royal Bank of Scotland lost 1.08% and Lloyds shed 1.53%.

German sports goods maker Adidas saw its shares surge after the company hiked its guidance for 2016. It reported a 35% jump in first-quarter operating profit and is expecting a boost from this summer’s Euro 2016 football tournament, as well as the Olympic Games in August, to cause a rise in net income of around 15%. Shares were up 5.53% on Wednesday.

Oil prices were also trading in the green, but still off 2016 highs after the US government reported US crude stockpiles rose to a record high last week. Crude oil was up 1.18%, trading at $43.87 a barrel as early losses faded. Shares in oil giant BP finished up 1.7%, and rival Royal Dutch Shell gained 2.5%.

US stocks were driven lower as Twitter and Apple’s earnings added to the gloom around the current reporting season for technology companies.

Apple’s stock fell 8% during pre-market action on Wednesday after quarterly revenue declined for the first time in 13 years. The tech giant is having a tougher time selling everything, from MacBooks to its main revenue driver, the iPhone.

CEO Tim Cook described the three-month period as a “challenging quarter”, representing a “pause is our growth”. Rumours of struggling sales have been dominating the conversation around Apple for the past few months, and analysts were largely expecting a drop in iPhone numbers. What they were not expecting, however, was a drop in guidance for the upcoming quarter.

Meanwhile, Twitter turned in yet another disappointing quarterly report, which sent its shares down 14% ahead of the bell, as revenue and user growth came up short of expectations.

As investors await the Fed’s decision on interest rates, the precious metal industry headed for a third straight session of gains. Gold futures headed higher to trade at $1,250, gaining 0.6%.

Although no interest rate hike was expected during Wednesday’s meeting, the US central bank’s statement could offer clues about the Fed’s outlook for the economy and future rate moves during the year. Meanwhile, all eyes will turn to the Bank of Japan on Thursday, as the possibility of the bank cutting rates further into negative territory is not being overlooked.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd. has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.