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German confidence was hit hard by Brexit. The ZEW Indicator of Economic Sentiment for Germany plunged 26 points in July to -6.8. “Uncertainty about the [Brexit] vote’s consequences for the German economy is largely responsible for the substantial decline in economic sentiment,” commented ZEW-President Professor Achim Wambach. “In particular, concerns about the export prospects and the stability of the European banking and financial system are likely to be a burden on the economic outlook.” The euro is lower by 0.2% at 1.1059.
UK CPI jumped more than expected. Consumer prices in the UK jumped 0.5% year-over-year in June, outpacing the 0.4% gain that was expected. The reading was up from May’s 0.3% print, and was fuelled by a 10.9% spike in air fares. The British pound is down 0.6% at 1.3176.
Turkey is being reviewed for a downgrade at Moody’s. The credit rating agency has placed Turkey’s Baa3 rating on review for downgrade following Friday’s failed coup. Moody’s says even though the coup failed, its occurrence is a “reflection of broader political challenges, as associated credit risks remain elevated. These risks and relatedly the country’s slower-than-expected progress in materially advancing planned economic reforms, in the context of both weakening growth and external buffers, had been previously captured in Moody’s negative outlook.” Additionally, Moody’s lowered its growth forecast to 3% and thinks that risks are “to the downside.” The Turkish lira is uncharged at 2.9775 per dollar.
Netflix is getting crushed after its disappointing quarter. The video-streaming service earned $0.09 per share as revenue climbed by 31% YoY to $2.1 billion. The good news stopped there as the company said it added just 160,000 US subscribers, which was well shy of its guidance of 500,000. Additionally, Netflix gained just 1.52 million international subscribers, missing its 2 million subscriber guidance. Q3 subscriber growth guidance for both the US and internationally were well shy of Wall Street estimates. Shares of Netflix were down more than 15% in after-hours trade.
Yahoo reports, gives no update on sale. The search giant reported adjusted earnings per share of $0.09, missing analyst estimates by a penny. Revenue edged up 5% YoY to $1.31 billion, beating the $1.08 billion that was expected. Revenue for mobile, video, native, and social surged to $504 million, up 25% from a year ago. The company expects to see revenue of between $1.275 billion to $1.325 billion for the third quarter. There was no word regarding the sale of its core internet business.
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IBM beat on the top and bottom lines. “Big Blue” earned $2.95 per share, out pacing the $2.89 that Wall Street analysts were expecting. Revenue fell 3% YoY to $20.24 billion, but that was ahead of the $20.03 billion that was anticipated. Revenue has now fallen in 17 straight quarters. However, cloud revenue remained a bright spot, surging 30% to $3.4 billion. “IBM continues to establish itself as the leading cognitive solutions and cloud platform company,” said IBM chairman, president, and CEO Ginni Rometty in the earnings release. “In doing so, IBM is pioneering new business opportunities beyond the traditional IT marketplace.”
Wells Fargo is buying a new London headquarters. The world’s largest bank by market cap is moving into a new London headquarters with a price tag of £300 million ($396 million). According to the Financial Times, the bank is buying 33 Central, an 11-story building near the London Bridge. The purchase is said to be a sign of confidence that London will remain a financial hub despite the upcoming Brexit.
Stock markets around the world trade mixed. Japan’s Nikkei (+1.4%) led in Asia and Germany’s DAX (-1.4%) lags in Europe. S&P 500 futures are down 6.25 points at 2153.75.
Earnings reporting picks up. Goldman Sachs, Johnson & Johnson, Lockheed Martin, Philip Morris, and United Health are among the names reporting ahead of the opening bell while Microsoft and United Continental release their quarterly results after markets close.
US economic data trickles out. Housing starts will be released at 8:30 a.m. ET. The US 10-year yield is lower by four basis points at 1.54%.
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