Wednesday, 22 July 2015

Daily Market Review 22.07.2015

Microsoft Corp. (MSFT, +0.77%) failed to impress when the company reported its second quarter earnings which reflected its biggest quarterly loss ever. To start, Microsoft reported a loss in revenue which declined by 5.1 percent. This came as a result of the continued decline in PC demand as well as other items which were all related to the Nokia mobile-phone business which Microsoft acquired last year. For the period ending on the 30th of June, revenue declined from $23.38 billion a year ago to $22.18 billion. This beat expectations of analysts polled by Thomson Reuters who expected revenue of $22.03 billion. Also on the upside were the earnings per share and after removing one-time items as well as the write-down, Microsoft managed to beat analysts’ expectations. Microsoft reported a loss of 40 cents a share, or $3.2 billion, which is down compared to 55 cents a share, or profit of $4.61 billion, reported a year ago. Excluding restructuring charges, the write-down and other one-time items, earnings per share were 62 cents which beat expectations for profit of 56 cents. With Apple Inc. dominating the smartphone market, Microsoft's Windows smartphones only make up a very small share of this market. At the beginning of July, Microsoft stated that they would be writing down approximately 80 percent of the $9.4 billion deal for Nokia's handset business. In addition, the technology giant said that it would cut more than 6 percent of its global workforce which would mostly impact its mobile phone operation. All eyes are now on the release Windows 10, the latest version of Microsoft's operating system, and how this will impact the financial performance of the company. Meanwhile, Microsoft shares are currently trading at $47.28 a share.

On Tuesday, U.S. stocks traded lower with the Dow Jones Industrial Average (DJIA) declining more than 180 points. This drop came as a result of a big decline in the share price of both United Technologies Corp. (UTX, -7.03%) and IBM (IBM, -5.86%) which both reported poor quarterly reports. IBM is the 2nd highest-weighted component in the blue chip Dow index while United Technologies sits in tenth place. As a result of a decline in these companies, this contributed to a 120 point drop in the Dow. At the close of trading, the DJIA was down 1%, or 181.12 points, at 17,919.29. Twenty six of the index’s 30 components, finished lower. Meanwhile, the Nasdaq Composite index (COMP) also declined 0.2%, or 10.74 points, to 5,208.12, retreating from the record close set on Monday. Also on the downside was the S&P 500 index (SPX) which dropped 0.4%, or 9.07 points, to 2,119.21. Losses were led by the telecoms sector which declined 1.7 percent while 9 out of the index’s 10 main sectors ended lower.

On Tuesday, the U.S. dollar (USD) traded lower. This came in response to investors locking in profits as a result of the USD’s recent rise to a three-month high. Meanwhile, the greenback continued to remain supported by expectations of an interest rate hike by the Federal Reserve in the near future after the Chair Janet Yellen stated last week that the central bank is likely to raise rates ‘at some point this year’. The EUR/USD traded at 1.0913, up 0.84% while the GBP/USD traded at 1.5549, down 0.10%. Meanwhile, against the Australian dollar, the Japanese yen and the Swiss franc, the U.S. dollar traded lower with the AUD/USD up 0.81% at 0.7432, the USD/JPY down 0.20% at 124.02 and with the USD/CHF down 0.74% and trading at 0.9574. Also, the U.S. dollar index was at 97.54, down 0.62%.

In early Asian trading on Wednesday, crude oil prices dropped. This came in response to the industry data on stocks that was released in the U.S. on Tuesday. According to the API (American Petroleum Institute), last week, crude oil stocks rose by 2.3 million barrels in the U.S. Meanwhile, in their weekly report last week, the EIA (Energy Information Administration) reported that for the week ending on the 17th of July, crude stockpiles in the U.S. declined by 2.2 million barrels. WTI crude oil for delivery in September traded at $50.60 a barrel, down 0.51%, on the NYMEX. On Monday, Brent crude oil for delivery in September traded at $57.08 a barrel, up 0.78%, or $57.08, on the Intercontinental Exchange (ICE) in London.

The Daily Market Review brought to you by Billionaire Forex UK in collaboration with STOCK. 

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