Friday 19 January 2018

Wall Street and European stocks tumble as earnings disappoint

Ben Martin

SHARES on Wall Street followed European markets lower amid mounting investor concern about slowing economic growth after Moody's downgraded five Spanish regions and poor US corporate earnings.

The Dow Jones Industrial Average dropped 175 points after disappointing results from DuPont, 3M and United Technologies, which have increased worries over the state of the global economy. Sentiment had already been knocked in recent days by numbers from Google and Caterpillar, and the Dow Jones closed more than 200 points lower on Friday evening.

“Profit-taking is the name of the game and the fact that these earnings are coming thick and fast, failing to meet expectations and painting murky outlooks, given the slowdown in the global economy, particularly China, just highlights how grim the environment is for the stock market,” said Ishaq Siddiqi, a market analyst at ETX Capital.

European stock markets were down as much as 2pc in afternoon trading, with the FTSE 100 sliding more than 1pc.

The underwhelming earnings from the US added to disappointing corporate updates in London, where falls in Whitbread and Burberry shares weighed on the blue-chip index.

The FTSE 100 lost 86 points to 5798 and was pulled down by Burberry, which dropped 3.5pc after fellow luxury goods retailer Mulberry issued a profits warning. The group said wholesale shipments fell 4pc while international retail sales did not meet expectations. That had a knock-on effect on Burberry, which put out a profit warning of its own last month.

Meanwhile, Whitbread also shed 1pc after the Costa Coffee-owner sounded a note of caution about the outlook for consumers.

"Our consumer market context continues to be broadly flat," the company said. "Against this background we expect to continue to outperform our competitors and like for like sales growth to be more moderate than the high levels achieved in the first half."

At the other end of the FTSE 100, chip designer ARM Holdings was the top performer, rising 6.3pc on the back of a 22pc increase in pre-tax profits in the third-quarter.

On the FTSE 250, the unexpected announcement that Chemring chief executive David Price had resigned sparked investor nervousness that Carlyle's potential takeover of the FTSE 250 company may collapse and the shares tumbled 9pc.

The private equity group has until November 9 to make a firm offer or walk away, while the new CEO Mark Papworth takes over just a few days before, on November 5.

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business