This content is from: Portfolio

Daily Agenda: Earnings Season Leaves Investors on Edge

China GDP in line with forecasts; Nokia deal to acquire Alcatel-Lucent officially announced; European Commission files antitrust action against Google.

Financial institutions Wells Fargo and J.P. Morgan Chase & Co. announced yesterday better-than-consensus first-quarter results for 2015 on the back of improved investment business — welcome news after a downbeat start to this earnings reporting season. Analysts’ guidance for S&P 500 companies in aggregate has come down by more than 7 percent in recent months. Positive signals from the financial sector seem likely to be offset by negative projections for energy players as oil prices remain low. Mixed consumer data suggests that some segments of the consumer discretionary segment may have had a tough three months. Critically, blue-chip firms with potentially negative exposure to the strengthening U.S. dollar will be announcing in the coming days. Among them is Philip Morris USA, the U.S. affiliate of conglomerate Altria Group, which reports earnings tomorrow.

China reports first-quarter 2014 GDP. China’s National Bureau of Statistics reported 7 percent year-over-year growth for first-quarter 2015, in line with consensus forecasts. The figures represent a 1.3 percent growth versus the final three months of 2014, with both retail sales and critical urban fixed-investment components registering weaker than anticipated by polled economists. Recent weakness in some activity measures has helped spark bullish trends for Chinese equities, as investors speculate that more intervention from the People’s Bank of China is likely in the near term.

Euro zone registers large trade surplus. After a record-high trade surplus in January, February figures released today by Eurostat for the 19-nation currency bloc posted nearly as strong numbers, with exports rising by 4 percent year-over-year to bring the trade surplus to a seasonally adjusted €20.3 billion ($21.5 billion). A sharp decline in the euro resulting from European Central Bank easing measures has left the region’s export industries on a more competitive footing.

European Commission brings antitrust action against Google. The European Commission today formally filed a statement of objections over Google’s search engine and Android mobile phone software franchises. The politically charged discussions in recent years surrounding the Commission’s investigation into competitive practices by the firm, combined with multiple failed attempts at a settlement, had left many investors expecting a formal suit.

U.S. factory activity expected to show slowdown. Industrial production data for March, to be released by the Federal Reserve today, is expected to register a marginal contraction for the month. Consensus forecasts call for a fourth consecutive monthly drop in the manufacturing segment specifically, as a strengthening dollar weighs on export demand.

Nokia deal to acquire Alcatel-Lucent. Finland-headquartered telecoms equipment manufacturer Nokia Corp. formally announced today an agreement to purchase French company Alcatel-Lucent in a $16.6 billion all-stock deal that will create a global networking giant. After years of discussions the two firms, the merger will leave Alcatel-Lucent shareholders with 33.5 percent ownership of the new firm.

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