Global Markets, Futures Slide Spooked By Poor Amazon Earnings, US Politics

Friday, July 28, 2017
By Paul Martin

by Tyler Durden
Jul 28, 2017

S&P futures have tracked both European and Asian markets lower, which were dragged down by the big EPS miss and guidance cut reported by Amazon on Thursday. Meanwhile, the pounding of the dollar has resumed with the euro and sterling strengthening against the dollar due to renewed political concerns after this morning’s stunning failure by the Senate GOP to pass a “skinny” Obamacare repeal after John McCain sided with democrats.

AMZN was down 3% after missing on the bottom line, reporting slowing AWS profits, and forecasting Q3 operating income which may be a loss: “It has been a pretty good season for earnings and this is the first big company that has sown a few doubts on that, and it also raises question on where the broader tech sector is headed from here,” said Investec economist Victoria Clarke.

MSCI’s broadest index of Asia-Pacific shares ex-Japan fell 0.8%, with Samsung Electronics, Asia’s largest company by market cap, tumbling 3.5%.

The dollar headed for a weekly decline against most of its major peers amid the Federal Reserve’s dovish tone, with traders looking at today’s first look at Q2 GDP as the next driver for the currency. Treasuries were flat on the day and set for their first weekly decline in three weeks.

In Asia, a selloff in tech stocks prompted by Amazon’s results sent benchmark indexes tumbling from Sydney to Hong Kong. The slide in global tech shares also spread to Europe on heightened concerns about corporate earnings as equity markets opened lower, with technology sector particularly heavy as it catches up with Nasdaq weakness yesterday. French CAC underperforms after earnings misses from L’Oreal (-1.9%) and Renault (-5.7%). Europe’s tech index fell 1.4 percent in early trading on Friday, the region’s worst-performing sector.

“In terms of one story shaping sentiment it is quite remarkable, but markets are also a bit nervous ahead of U.S. GDP numbers due out today,” said Investec’s Clarke. “The trigger was Amazon but developments overnight on U.S. healthcare has not helped sentiment.”

German bunds extend a selloff as the country’s CPI came in at 1.7%, hotter than the 1.5% expected, confirming the upside risks signaled by strong regional numbers; peripheral European bonds and other core fixed-income markets moved lower in tandem.

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