Risk off on Trump woes as earning season continues

US equities kick the new week off on the back foot snapping a three-day winning streak. Last week the S&P managed to eek out a weekly gain but even as a strong earnings season continues a risk off tone is dominating today’s session as in Europe, as stocks struggle for direction amid Trump policy worries. Additionally, given Friday’s rally a certain amount of profit taking was on the cards for today.

Earning season continues

Crunching the numbers as we approach three quarters the way through reporting season and the picture is looking solid. 75% of firms have beaten on earnings and 50% have beaten on profits; added to that we have seen fewer cases of figures being revised down prior to release than we have in other quarters.

The solid earnings had not, to date, included toy makers, which had experienced a weak holiday season. Mattel the number one toy maker in America, had already reported disappointing holiday sales and profits in January citing a significant slowdown in the US toy category.

Hasbro up 14%

However, today Hasbro bucked the trend, reporting fourth quarter figures that smashed expectations. The toy maker saw revenue increase 11.2% whilst revenue from girls’ toys jumped 52%. Given the shaky numbers from toy makers so far this season, the relief from the market was substantial, causing the stock to jump 14% on the open, whilst rival Mattel also jumped 2% on the back of the news.

Tiffany & Co loses its shine

On the downside, Tiffany&Co was a notable loser. The high-end jewellery chain slid 2.5% in early trading after announcing that Federic Cumenal would be stepping down as CEO. This moves comes amid concerns for the financial position of the chain after holiday sales fell 4% compared to a year earlier and sales at its flagship store on fifth avenue fell 14%.

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