Stock Market New (US Open) – European and US shares extend losses as North Korea weighs


Raffi Boyadjian, XM Investment Research Desk

Major European bourses fell deeper into the red during the course of the day and ahead of the US open. Market sentiment remained risk-off followed the heightened geopolitical tensions in the Korean peninsula, while the incident earlier today involving a car deliberately running over a group of soldiers in a Paris suburb also weighed on equities. US stocks looked set to extend yesterday’s losses, with the Dow Jones opening 0.2% lower, the S&P 500 by 0.5% and the NASDAQ Composite by 0.9%.

Financial stocks were the biggest casualty of today’s negative risk sentiment, with the Euro STOXX’s financial sector losing 2%, led by Commerzbank AG and Deutsch Bank AG (both down 4%).

Mining stocks were one of the few gainers as increased demand for the safe-haven gold boosted the shares of precious metal producers such as Fresnillo and Randgold Resources. Fresnillo plc was the biggest gainer on the FTSE 100, rising by 5%, followed by Randgold Resources Ltd, which was up 2.9%.

Overall, the FTSE 100 was down 0.8% in afternoon European trade, pulled lower by G4S. Shares in the security provider slumped by over 5% despite the company reporting a 7.6% increase in first half profits. Analysts were not impressed by G4S’s underlying revenue growth of 3.5% in the second quarter, which missed estimates of 7%.

Across the continent, healthcare stocks outperformed after Novo Nordisk A/S, a Danish pharmaceutical company, reported second-quarter operating profit of 13.4 billion kroner versus estimates of 12.7 billion. Its shares surged more than 6%. Another standout stock was Scout24 AG. The German online classified ads company reported revenue growth of 8.1% in the first half, helped by winning back more customers. Along with Novo Nordisk, Scout24 was the biggest gainer in the European STOXX 600.

However, the index itself was down by almost 1%, while the blue-chip STOXX 50 index suffered sharper losses, dropping by 1.7%. Europe’s other main indices were also in negative territory, with the Frankfurt Dax and Paris CAC 40 down by similar amounts, declining by 1.5% and 1.8% respectively.

On Wall Street, Walt Disney dragged the Dow Jones lower at the open. The company’s adjusted earnings per share came in at $1.58, beating estimates of $1.55 per share.  However, its revenue was $14.24 billion, which fell short of expectations of $14.42 billion. Walt Disney shares fell almost 5% in pre-market trade and Netflix is also expected to open lower after Disney said it will stop streaming its movies via Netflix and start its own streaming service.

The biggest faller on the S&P 500 was TripAdvisor, which fell 7.7% after it released its latest earnings. TripAdvisor announced adjusted earnings per share of 38 cents, beating estimates of 30 cents a share. However, its shares were hit after it cut its full year guidance for 2017.

Energy stocks were a bright spot on the Dow Jones, with strong gains for Chevron and Exxon Mobil.