Global markets were mostly positive in July as U.S. earnings season got into full swing.
Second-quarter U.S. earnings have been well ahead of consensus estimates, with S&P 500 companies reporting average earnings growth of 24% and sales growth of 9.8%, according to FactSet Research. Approximately 80% of companies releasing quarterly results have beat estimates.
The FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) received the most attention by market participants. Facebook plunged 20%, or $120 billion, after it reported disappointing results, marking the biggest one-day loss for a listed company in U.S. market history. Investors were spooked by Facebook’s forecast showing that its number of active users is growing slower than expected. Netflix also tumbled after it missed subscriber numbers for the first time in five quarters. Despite the July hiccup, Netflix shares are still up almost 80% year-to-date.
Amazon, Apple and Google, on the other hand,reported strong numbers for Q2 and their share prices rallied.Apple became the first U.S company to reach a $1 trillion market cap.
Global trade war concerns continued in July with tension between the US and China remaining strained as the trade spat between the two countries continued. In the latest development, the Trump administration has said it would move to impose a 25% tariff on an additional $200 billion’s worth of Chinese imports versus the 10% previously proposed. In response, China threatened to slap tariffs of up to 25% on $60 billion in U.S. goods.