US tech earnings weigh on markets

AP News
Posted: Jul 19, 2013 9:01 AM
US tech earnings weigh on markets

LONDON (AP) — Disappointing earnings from two U.S. technology giants weighed on global markets Friday after a stellar run that has seen Wall Street's main indexes post a series of all-time highs.

Stocks around the world have had a solid week, especially after U.S. Federal Reserve Chairman Ben Bernanke indicated that the central bank's monetary stimulus may remain in place for longer than many in the markets had been predicting.

As a result, investors were looking for a reason to book some profits ahead of the weekend and the earnings figures from Google and Microsoft gave them that opportunity, despite a solid report from General Electric.

Google's quarterly report showed its average ad rate fell from the previous year for the seventh consecutive quarter. In an unexpected turn, the decline deepened for the first time in a year.

Microsoft booked a large write-off to its Surface RT business after it slashed prices on the tablets to stimulate demand this week. Its quarterly earnings results also showed that Windows 8, an operating system designed to bridge the divide between PCs and tablets, has been so poorly received that it contributed to a revenue drop in the operating system software unit.

"Results from technology companies have generally been poor with eBay and Intel also missing expectations," said Fawad Razaqzada, technical analyst at GFT Markets. "Overall, however, most of the S&P 500 companies who have reported their results have beaten earnings expectations; though, one has to be wary of jumping to conclusions because it is merely early days still."

In Europe, the FTSE 100 index of British shares was 0.4 percent lower at 6,608, while Germany's DAX fell 0.4 percent to 8,307. The CAC-40 in France was down 0.4 percent at 3,910.

Wall Street was poised for a disappointing open with both Dow futures and the broader S&P 500 futures down 0.2 percent. Modestly better than expected earnings from GE did little to alter the cautious mood expected at the open.

Stock markets, particularly in the U.S., have had a bumper month following a bout of jitters prompted by uncertainty over when the Fed will start reducing its monetary stimulus.

The Fed has been buying $85 billion of financial assets a month in the hope of reducing long-term borrowing rates and shore up the U.S. economy. Bernanke has said that the so-called tapering will begin when a number of economic indicators point to a clear recovery path. The prospect that it may remain for longer has been greeted positively by investors who have grown used to the stimulus money floating around markets.

"Despite the weakness in stocks this morning, global equities are still on track to post a fourth week of gains, helping to underpin the generally bullish feeling in the market of late," said David White, a trader at Spreadex.

Earlier in Asia, markets closed mostly lower following the tech reports in the U.S. and amid worries over the Chinese and Japanese economies, the world's number 2 and 3.

Japan's Nikkei 225 shed 1.5 percent to 14,589.91 while Hong Kong's Hang Seng added just 0.1 percent to 21,362.42. Seoul's Kospi wavered between gains and losses, finishing 0.2 percent down at 1,871.41. China's Shanghai Composite index fell 1.5 percent to 1,992.65.

In currency markets, trading was steady with the euro flat at $1.3111 while the dollar was down 0.2 percent at 100.32 yen.

Meanwhile in the oil markets, the price of benchmark New York crude was 84 cents higher at $108.65 a barrel.


Cerojano contributed from Manila, Philippines.