After earnings deluge, Fed meeting

Global stocks slid on Thursday (Jul 28) as investors digested a barrage of company results and indications by the US Federal Reserve that it would take a slow, measured approach to any interest rate hikes.

A day after the Fed held rates steady, markets faced earnings reports from big-hitters such as Britain's Lloyds Banking Group, France's Carrefour, Germany's troubled Volkswagen and Facebook in the US.

US stocks were down despite strong Facebook earnings, failing to bring a closing flourish to European stock markets which were all in the red, led by Paris CAC 40.

The market had been "really in waiting mode" ahead of the Fed meeting, and its outcome prompted smaller market reactions than had been predicted, said IG France analyst Alexandre Baradez.

Tokyo led most Asian markets lower on worries over the size of the Bank of Japan's expected stimulus announcement due on Friday.

'POSITIVES OVERLOOKED'

Strong Facebook earnings boosted the Nasdaq but failed to ignite a rally in the broad market, suggesting growing fatigue with a month-long stock rally, analysts said.

The Federal Reserve on Wednesday held borrowing costs but noted the world's top economy had improved and expressed less fear about the impact of Britain's EU exit decision.

The meeting followed a string of positive readings - particularly on jobs growth and key consumer spending - that has fanned speculation of a tightening in monetary policy despite weakness in most other global economies.

However Oanda's Craig Erlam said he believed the Fed's "statement itself contained some positive language that appears to have been overlooked by the market."

In Frankfurt, Volkswagen shares went into reverse, dropping 3.1 per cent at €123.70, after the scandal-struck German car manufacturer said second-quarter profits dived 57 percent.

Earnings were weighed down by almost €2.5 billion of special items, mostly related to 2015's diesel emissions cheating scandal.

In Paris, Carrefour shed 5.5 per cent after the French supermarket giant said half-year net profits tumbled 40 per cent hit by low fuel prices, currency fluctuations and restructuring costs.

LLOYDS BANK AXES JOBS

In London, Lloyds Banking Group closed 5.8 per cent down, after announcing it will axe another 3,000 jobs by 2017, and partly blamed the low interest rate environment.

Royal Dutch Shell also suffered after revealing that net profit collapsed in the second quarter on low oil prices, weak refining margins and production outages.

On the upside, shares in Rolls-Royce rocketed 13.5 per cent.

Adjusted pre-tax profit tumbled almost 80 per cent to £104 million in the first half on weak demand at its civil aerospace and marine divisions. However, that beat forecasts for a loss of £19 million.

"The reason behind the surge in price seems odd on first viewing ... but this is a classic example of low expectations being exceeded and causing a stock to rally," said analyst David Cheetham at London brokerage XTB.

The strong yen sent Japan's Nikkei tumbling as the country's central bank began its own two-day policy meeting. Traders are worried the bank will not deliver Friday a big enough stimulus to kickstart the world's number three economy.

The Japanese government's announcement Wednesday of a 28 trillion yen stimulus - without releasing details - was unable to provide much excitement in Tokyo, where the Nikkei index ended 1.1 per cent lower.

Source: AFP