Foreign Stock Roundup: Alibaba Beats, Petrobras Misses

Foreign markets grappled with political events in the U.S. and tensions related to North Korea over last week. Europe’s stocks were also weighed down by the shocking terror attack in Barcelona. Earnings numbers, particularly from Australia, continued to have a significant impact on market direction. Meanwhile, stocks in Argentina and Brazil were largely guided by policy-related developments.

Trump’s Actions, Spain Terror Strike End STOXX’s Winning Run

Stocks across Europe closed in the green on Monday after prominent U.S. officials downplayed the chances of a conflict with North Korea. The STOXX 600 added 1.1% with nearly all sectors closing with gains. Banking stocks were among the leading performers, closing the day more than 1.4% higher.

The STOXX 600 increased 0.1% on Tuesday with nearly all its sectors ending the day with gains. The de-escalation of tensions between the U.S. and North Korea prompted investors to turn toward relatively riskier investments. Shares of oil and gas companies fell following concerns over weak demand in China even as strong OPEC production dampened investor sentiment.

Easing of tensions between the U.S. and North Korea once again contributed to gains on Wednesday. The STOXX 600 gained 0.7% even as investors eagerly awaited the release of the minutes of the Fed’s July meeting. Energy and basic resources stocks were the leading gainers of the day following an increase in prices of oil and metals.

The STOXX 600 closed in the red on Thursday, losing 0.6%, following concerns over domestic political events in the U.S. President Trump’s decision to dissolve two business advisory councils weighed on investor sentiment. Banking stocks lost in excess of 1.5% after minutes released by the ECB reflected concerns over a likely surge in the Euro.

Stocks across Europe closed in the red on Friday in the aftermath of the most devastating terror attack experienced by Spain in 13 years. The STOXX 600 closed the day 0.7% lower but managed to secure a weekly gain of 0.6%. The FTSE 100, CAC 40, DAX and Spain’s IBEX 35 declined 0.9%, 0.6%, 0.3% and 0.6%, respectively.

U.S. Political Events, North Korea Tensions Weigh on Asia’s Stocks

A strong second-quarter GDP reading from Japan failed to arrest the Nikkei 225’s slide on Monday with the index slipping 1%. The 4% pace of expansion easily exceeded most forecasts. Geopolitical concerns led to South Korea’s Kospi losing 0.6%. Meanwhile, the S&P/ASX 200 gained 0.7%. The Shanghai Composite and the Shenzhen Composite gained 0.9% and 2%, respectively, with the Hang Seng also closing in the green.

Stocks across Asia ended with gains on Tuesday following strong gains on Wall Street and a change in investors’ risk appetite. The Nikkei 225 gained 1.1% even as the dollar gained versus the yen. The S&P/ASX 200 gained 0.5%. While the Hang Seng ended in the green, the Shanghai Composite and the Shenzhen Composite each gained 0.4%. India and South Korea’s bourses were closed for public holidays.

The majority of markets across Asia closed higher on Wednesday even as several companies from the region released earnings and the dollar moved higher. However, the Nikkei 225 lost 0.1%. The Kospi gained 0.6% while the S&P/ASX 200 recovered from early losses to end the day 0.5% higher. Even though the Hang Seng closed the day with gains and the Shenzhen Composite moved 0.6% higher, the benchmark Shanghai Composite ended the day 0.1% lower.

Stocks across Asia ended mixed on Thursday after the dollar’ surge was curbed by political events in the U.S. The Nikkei 225 lost 0.1% with auto and financials closing the day in the red. The Kospi gained 0.6% while the S&P/ASX 200 lost 0.1% and the Hang Seng closed the day in the red. However, the Shanghai Composite and the Shenzhen Composite increased 0.7% and 0.6%, respectively.

A selloff on Wall Street, triggered by rising apprehensions about the Trump administration’s likelihood of implementing its policy agenda, led to losses for Asia’s stocks on Friday. The Nikkei 225 lost 1.2%, falling to its lowest level in three months. The Kospi and the S&P/ASX 200 lost 0.1% and 0.6%, respectively. The Hang Seng ended the day in the red while the Shenzhen Composite declined 0.4%. Only the Shanghai Composite closed the day in the green, garnering slim gains.

Bovespa Gains from Policy Actions, Macri’s Fortunes Guide Argentina’s Stocks

Latin America stocks recovered from the previous week’s selloff on Monday. A climb-down in tensions between the U.S. and North Korea was primarily responsible for the day’s gains. Mexico’s benchmark S&P/BMV IPC index increased 1.1%, rebounding from its worst weekly losses in eight months. Brazil’s Bovespa gained 1.6%, rising to the highest point witnessed since May.

On Tuesday, markets across Latin America closed mixed. The Bovespa gained 0.5%, powered by a bunch of bullish corporate developments. Argentina’s benchmark index the Merval lost 1.1% following a bout of profit taking following strong gains on Monday. Expectations that President Mauricio Macri, a candidate favorably disposed to industry, would gain from mid-term legislative elections lifted Argentina’s stocks.

Stocks in Brazil swung between gains and losses on Wednesday after credit agency Standard & Poor’s refrained from downgrading the country. The decision came after the country extended budget deficit targets to 2020 after legislators declined to increase taxes, a move required to raise revenues impacted by the recession. The Bovespa closed the day flat. Meanwhile, the S&P/BMV IPC index lost 0.6%.

The Bovespa lost 0.2% on Thursday, snapping a four-session long stretch of gains. Stocks in Brazil were weighed down by concerns that the government would fail to push through social security reforms, which would impair the country’s efforts to reduce surging public debt.

Brazil’s stocks were near their highest level in six months on Friday. The government’s decision to extend tax incentives for the oil industry lifted shares of oil major Petrobras (NYSE:PBR) . Shares of the state-owned company gained 3.6%, marking the largest increase in a month. Vale SA (NYSE:VALE) contributed most of the Bovespa’s gains for the day, following a rise in iron futures listed in China. Brazil’s benchmark index closed the day 1.2% higher.

Stocks in the News

Alibaba Group Holding Limited (NYSE:BABA) reported first-quarter fiscal 2018 (ended Jun 30, 2017) earnings of 94 cents per share, surpassing the Zacks Consensus Estimate by 21 cents. Alibaba reported revenues of RMB50.18 billion (US$7.40 billion), up 30.1% sequentially and 56.1% year over year. Also, revenues were above the Zacks Consensus Estimate of US$7.02 billion.

Mobile MAUs were 529 million, improving 24% year over year and 4% sequentially. This was because the adoption of mobile devices by consumers increased as the primary method of accessing Alibaba’s platforms.

China retail marketplaces had 466 million annual active buyers in the 12-month period ended Jun 30, 2017, representing 7% year-over-year growth. The number of paying customers of the cloud-computing business was 1,011,000, increasing 75% year over year and 16% sequentially. The stock has a Zacks Rank #2 (Buy). You can see Zacks Investment Research

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Written By: Zacks Investment Research