European and U.S. markets close higher | Calamatta Cuschieri

Markets update, LG Display to diminish investment plans and the EU are preparing $20 billion in tariffs on U.S. goods

South Korea’s LG Display Co Ltd slashed its investment plans by $2.7 billion to 2020 amid concerns for the global smartphone market
South Korea’s LG Display Co Ltd slashed its investment plans by $2.7 billion to 2020 amid concerns for the global smartphone market

European markets closed higher on Tuesday, showing an improvement from the weak sentiment seen in the previous session. The pan-European Stoxx 600 closed higher with a gain of 0.86% with almost every sector in the black. The benchmark reached a five-week intraday high.

Basic resources led the gains on Tuesday, rallying 4.7%, with the sector on track for its best day since President Donald Trump's election victory back in November 2016. PSA Peugeot shares climbed to the top of the pan-European Stoxx 600 after the firm's earnings defied expectations. UBS shares also rose after the bank reported a 9% increase in net profit during the second quarter.

Similarly the U.S. markets closed at a high. The S&P 500 and the Dow closed higher Tuesday as corporate earnings continued to surprise with an upward trend. Among high-profile companies that reported this week, Google Inc. stole the show by turning in second-quarter results that were significantly ahead of expectations, including the antitrust fine. The S&P 500 rose by 0.5%, to 2,820 while the Dow Jones Industrial Average gained 0.8%, to 25,240. The Nasdaq Composite Index broke the trend by slipping 1 point to 7,840.

LG Display continues with its loses, resulting in the company to diminish investment plans

South Korea’s LG Display Co Ltd which is a key Apple supplier, slashed its investment plans by $2.7 billion to 2020 amid concerns for the global smartphone market, following its posting of a second consecutive quarterly loss on sagging panel prices.

This cut highlights the bleak outlook for electronics makers and comes a week after another Apple Inc. supplier, Taiwan Semiconductor Manufacturing Co Ltd, also showed a reverse on its revenue and investment estimates.

Don Kim, LG’s chief finance officer spoke to an earnings conference call and stated that a conservative approach has resulted from uncertainty which exists in the mobile market at the moment.

LG shares plummeted by 7% versus the broader market's 0.3% fall following flagging of faster-than-expected panel price declines and an uncertain outlook.

Kim added that market conditions are becoming favorable, however the unpredictability remains high. This was down to an oversupply and asymmetrical competition which are deemed to be unavoidable.

LG said it would trim investment by $2.7 billion from what was initially planned by 2020, without revealing its total or previous capex targets. It also warned that it could adjust production in South Korea and China in response to trade disputes which currently exist between Washington and Beijing.

The EU are preparing $20 billion in tariffs on U.S. goods to counter imported cars tariffs

The European Union Commission is preparing to impliment tariffs on $20 billion of U.S. goods if Washington insist on imposing trade levies on imported cars, EU trade commissioner Cecilia Malmstrom stated on Wednesday.

She said that she hopes that it doesn’t come to that and that a solution can be discussed. If not, the EU Commission are preparing a lengthy list of many American goods that would amount to around $20 billion.

Any new European tariffs however, will not be directed at specific American states. Malmstrom said that tariffs will deal more with general goods such as agricultural products, machinery, high-tech products and other things.

She said that she didn’t believe that the U.S. Treasury Secretary, Steven Mnuchin’s, proposal to drop tariffs, non-tariff trade barriers and subsidies was serious, pointing out that the U.S. have laws and subsidies that protect American industries.

Malmstrom stated that in the TTIP negotiations efforts were made to convince the Unisted States to loosen those laws. However, it unfortunately fell on deaf ears as the U.S. did not move a millimeter on their respective views.

Disclaimer: This article was issued by Paul Paris, junior investment advisor at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are 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.

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