Markets turn lower

What started off looking like an optimistic day of earnings, ended up with markets worldwide closing largely in the red. In Asia, markets were mixed as disappointing results from automakers offset a weaker yen. In Europe, a rise in oil prices was short-lived, as stocks slipped following uninspiring financial results. US stocks mirrored the vibe in Europe, trimming their opening gains as a decline in Apple pushed the Nasdaq lower.

In Europe, energy companies were leading the way with gains, as Royal Dutch Shell and BP rose over 1.5%, but could not hold on to these advances, and closed 0.6% lower. The London benchmark enjoyed a good couple of hours in positive territory when oil prices shot higher after the International Energy Agency said the global oil glut would undergo a “dramatic reduction” in the second half of the year. Oil, however, erased these gains in the afternoon, dragging UK stocks down with it.

An unexpected spike in weekly jobless claims last week suggested that labour market growth remained weak in early May. Initial weekly jobless claims surged to a 14-month high to 294,000, pointing to an acceleration in layoffs. This data follows a report on jobs growth in April, which showed that the US economy had only added 160,000 jobs, thereby missing expectations by a wide margin. This news raised concerns about the health of the labour market, sending shares trading lower by the end of the day.

Apple stock was having a rough day, after tumbling 3% in morning trade on Thursday. This stock has seen steep declines in recent weeks, following its first ever drop in iPhone sales and its first year-on-year revenue decline since 2003. Apple shares have now plunged 20% since peaking at a four-month high of $112.10 on 14 April. This sell-off has knocked Apple off its throne as the most valuable company by market capitalisation, with Google holding company Alphabet reclaiming the top spot. Apple’s market cap has fallen to $491.3 billion, while Alphabet’s is now at $497.3 billion.

Adidas shares enjoyed a positive day of trading, having reached €115 during mid-day trading. The German sportswear company said on Thursday that it is ending its sponsorship deal with Chelsea Football club six years early by mutual agreement. Instead, it intends to focus on so-called “marketing investments” with big-name individuals rather than big-name clubs since it believes that investing in superstars like Lionel Messi, Gareth Bale and Paul Pogba will reap a higher return in future.

Staying in the clothing industry, Ralph Lauren also traded in the green after beating estimates with fourth quarter earnings. The luxury apparel company reported a net income of $41 million along with revenue of $1.87 billion. Ralph Lauren beat analyst estimates amid a reorganisation aimed at reigniting sales growth.

Investors also digested the Bank of England’s decision to keep rates at a record low, as well as offering a stark warning on the implications of a Brexit. It was “Super Thursday” for the BOE, since it released its latest policy decision, meeting policymakers’ expectations by leaving its key interest rate at a record low of 0.5%.

The UK central bank also stepped up its warning on the potential impact of a vote in favour of leaving the European Union in next month’s referendum. Speaking at a news conference, BOE Governor Mark Carney said that an exit vote could push the UK economy into a technical recession.

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.