Markets in Turmoil: Disappointment from Big Players’ Financial Statements. What’s Going On?

Challenges in the Stock Markets Today

Today, the markets are lacking momentum, and the reason behind this is the quarterly results of some US giants that investors have been eagerly anticipating.

Asian Stock Performance

Most Asian stocks have declined following the losses on Wall Street, which came after the less-than-enthusiastic start of earnings reports from the “Tech Giants,” the large-cap technology companies.

Stock indices in Japan, Hong Kong, and mainland China have all dropped, alongside US stock futures.
The earnings reports of some of the largest American companies, including Tesla Inc.
and Alphabet Inc., have been deemed insufficient to justify the recent rally in global stocks.
The yen has gained for the third day ahead of the Bank of Japan’s meeting next week.

Focus on European Luxury Stocks

Investor attention will now turn to European luxury stocks after the world’s largest company in the sector, LVMH, reported a slowdown in sales growth as Chinese consumers reduce their spending.

Today’s market focus is also on a series of PMI updates across Europe, seeking the latest clues on the health of the region’s economies.

Disappointing Quarterly Reports and Market Reactions

The earnings of US mega-cap tech companies have had a lackluster start, with Tesla and Alphabet disappointing investors.

Tesla fell short of Wall Street profit estimates in the second quarter, extending a tough start to the year marked by slower sales and mass layoffs.
Additionally, the electric vehicle giant postponed the unveiling of its autonomous driving Robotaxi until October.

Meanwhile, Alphabet’s shares also declined, indicating that more patience will be required to see tangible results from investments in artificial intelligence.
Despite second-quarter revenue and earnings in line with expectations, the technology giant slipped by 1%.

Alphabet earned $1.89 per share on $84.74 billion in revenue.
Consensus estimates were earnings of $1.84 per share on $84.19 billion in revenue.
However, revenues from its YouTube advertising segment fell short of forecasts.

“The bar was set so high for Alphabet that a modest earnings rise didn’t push the stock higher.
So, the market doesn’t have news to invest in,” said Kyle Rodda, senior market analyst at Capital.com.
“This also shows that tech stocks are overvalued here.
We’ll have to see how other tech giants perform and how the markets react,” he added.

LVMH’s Sales Growth Challenges

In Europe, the sales growth of LVMH slowed down last quarter as affluent buyers curbed spending on expensive Louis Vuitton bags and Christian Dior couture.

The organic revenue in the luxury group’s fashion and leather goods unit, its largest division, increased by 1%, about half of what analysts had predicted.
This compares to a 21% growth in the unit in the previous year.
LVMH witnessed a 14% drop in sales in the region encompassing China during the quarter.

The company’s report follows worse-than-expected results from the Swiss brand Swatch and a profit warning from the luxury group Burberry.