Equity Brief Wall Street outpaces Europe for another week

Stock market snapshot as of [26/7/2019 5:51 PM]

Thursday’s Draghi-triggered heebie-jeebies have passed though markets are still monitoring anything with implications for rates whilst also staying finely tuned to earnings season
That all adds up to a rebound that looks like it can make it to Wall Street’s close after European cash trading rounded-off the week on a firm note, albeit fractionally lower than the one before
Aside from a surprise beat by Alphabet and relatively solid Twitter earnings (offsetting Amazon’s miss) upside influences included a continuing strain of resilience amid overall mixed company results, and a better-than-expected early assessment of second quarter U.S. GDP
A low-momentum day in Treasury yields – with an eye to next week’s Fed meeting – may have played a part, as it kept a rein on the dollar bid. The greenback was also buffed by White House Economic Advisor Larry Kudlow ruling out retaliatory currency intervention; at least for the minority of speculators suspecting it. Still, with key economic readings tracking above forecast, it may only be a matter of time before rates anxiety returns, regardless of the Fed’s almost-certain 0.25% cut next week
Kudlow did have encouraging words on trade talks for markets. He noted further tariffs would remain on hold, if discussions next week go well, a counterpoint to President Donald Trump’s latest threat. Kudlow cautioned there’s no deal yet
In contrast to Europe, Wall Street is set to close the week definitively firmer, with the S&P 500 up about 1% on last Friday’s close

Corporate News

One thing Friday trading has in common on both sides of the Atlantic is that cheer has been led by a relatively small set of companies, a small worry regarding market breadth
Alphabet’s 10.8% rise a while ago constituted about 60% of the S&P 500’s gain in points. That ebullience is on the back of sharply better than expected earnings, revenue and key metrics than the market was expecting
Amazon fared far worse as its star-unit, AWS, produced lower than expected growth for the first time in dozens of quarters, albeit growth was still at a high-double digit percentage rate. Profit—and profit guidance—also missed as one-day shipping costs are set to be higher than initially thought. The stock dipped 2.5% at Friday’s worst. Solid Twitter earnings and user growth helped reassure tech sector investors though. The group’s story of underlying improvement, including 7-straight profitable quarters, looks more and more credible. The stock was last up 9.5%
In Europe, Vodafone, Nestle and Vivendi, helped carry the upside, whilst Gucci-owner Kering and Anglo were notable losers. The UK-based mobile giant launched a surprise pivot away from cell infrastructure ownership that could raise tens of billions of euros. Its stock surged almost 11%. Nestle gained 1.7% to a record high as the STOXX heavyweight’s deal with Starbucks gave profits a bigger than expected boost. Vivendi’s first-half adjusted net income also beat. Kering offset some of the gains with an 8% slump as Gucci sales disappointed. Miner Anglo American reported inconvenient news ahead of earnings next week. Its biggest shareholder will sell his stake. The stock fell 4%

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