Global Market Report 26 July 2012

Upbeat earnings from Boeing and Caterpillar helped the Dow industrials rise for the first day in four.

The Dow Jones Industrial Average rose 58.73 points, or 0.5%, to 12,676.05. The blue-chip benchmark had fallen at least 100 points in each of the previous three sessions.

The Standard & Poor's 500-stock index, meanwhile, edged down 0.42 point, or less than 0.1%, to 1,337.89, its fourth-straight daily loss. Technology shares led declines in four of the index's 10 sectors as Apple, the world's biggest company by market capitalisation, dropped 4.3%, its largest drop since October.

The technology-heavy Nasdaq Composite Index retreated 8.75 points, or 0.3%, to 2,854.24.

Apple reported earnings and revenue below analysts' forecasts, as iPhone sales rose less than anticipated. That marked only the second time in the past 39 quarters that results missed expectations.

Shares of Boeing rose 2.8%, leading the Dow higher, after the company raised its financial projections for the year on higher international defense and commercial-jet sales.

Caterpillar gained 1.4% after the world's biggest seller of bulldozers, excavators and other earth-moving machinery boosted its profit forecast, despite widespread fears the global economy could worsen.

Weighing on the broader market, sales of newly built homes in the US dropped more than expected to the lowest level in five months in June, according to the Commerce Department.

In other earnings news, Netflix tumbled 25%, the biggest slide among S&P 500 components after giving a downbeat outlook for the third quarter.

Eli Lilly rose 2.7% after the pharmaceutical company reported better-than-expected second-quarter results and raised its full-year earnings outlook.

RadioShack plunged 29% after the electronics seller reported a surprise second-quarter loss on lower consumer-electronics sales and a disappointing gross margin rate, and suspended the payment of its dividend.

WellPoint, poised to be the largest US health insurer after its planned acquisition of Amerigroup, slid 12% after lowering projections for earnings and membership this year.

The US dollar backed off a two-year high and the euro bounced after a European Central Bank policy maker said he sees some arguments in favour of allowing the euro zone's permanent rescue fund to apply for a banking license.

The US government locked in yet another record-low borrowing cost. At 7:45 AEST, the 10 Year Treasury note was 1.40%, and the 5 Year note was 0.55%.

European stock markets bounced between gains and losses, as comments from European Central Bank policy maker Ewald Nowotny about the region's rescue fund lent support, while weak US housing data checked investor sentiment.

The Stoxx Europe 600 index shed 0.1% to close at 250.39. The index, in positive territory for most of the session, slipped into losses in afternoon trading, as US sales of new single-family homes fell 8.4% in June, colouring investor sentiment both on Wall Street and across the Atlantic.

Stocks got an early push from Mr. Nowotny, who reportedly said there are arguments in favour of giving the European Stability Mechanism, the European Union's rescue fund, a banking license. Such a license would allow it to borrow money from the ECB, according to Bloomberg.

The comments helped ease pressure on Spain's borrowing costs. The yield on its 10-year government bonds fell back 21 basis points to 7.34%. Spain's IBEX 35 index added 0.8% to 6,004.90.

In Germany, Daimler AG advanced 4.1% after the car maker affirmed its full-year earnings outlook, despite posting a lower profit for the second quarter. Volkswagen AG and BMW AG both tracked Daimler higher, adding 1.3%.

The DAX 30 index rose 0.3% to 6,406.52, shaking off a drop in the Ifo business climate index to 103.3.

In France, the CAC 40 index gained 0.2% to 3,081.74, lifted by banks. Credit Agricole SA rose 1.4%, while Societe Generale SA added 1.2%.

Shares of Peugeot SA fell 2.5%, however. The car maker presented plans to raise 1.5 billion euros, as it swung to a loss in the first half of the year.

Meanwhile, UK stocks trailed other major European bourses, weighed by weak economic-growth data. Gross domestic product fell 0.7% in the second quarter compared with the first quarter, hit by a 5.2% drop in the construction sector.

Overall, the FTSE 100 index inched marginally lower to 5,498.32, supported by bank heavyweight HSBC Holdings PLC, up 1.4%.

Shares of BT Group PLC dropped 3.3%, as its first-quarter sales declined and missed analyst expectations.

Asian markets fell because of concerns over Europe's debt crisis and as disappointing Apple earnings in the US pushed down technology manufacturers in Asia.

Sentiment was damaged by news of uninspiring corporate earnings in the US overnight. At the forefront was Apple, which delivered disappointing numbers after the session in New York finished.

Below-expectation earnings from one of the world's most famous consumer-electronics companies had knock-on effects on electronics companies in Asia, which was felt hardest in technology-heavy markets such as South Korea and Japan.

The Nikkei ended the day 1.4% down at 8,365.90, putting the market back into negative territory for the year, as the market was also hindered by a stronger currency. The Japanese benchmark sank to a seven-week low, with bell weather electronics companies Sony and Panasonic slumping 5.2% and 5.5% respectively.

South Korea's Kospi fell 1.4% to 1,769.31. In addition to the sell-off in technology stocks, investors offloaded car makers and chemical stocks.

The Apple results were bad news for regional companies that supply the US tech giant. In South Korea, LG Display dropped 4.8%; in Japan, Sharp lost 10%; and in Taiwan, Hon Hai Precision, the company that assembles iPhones and iPads, fell 4.3%.

In China, the Shanghai Composite ended the day 0.5% lower at 2,136.15, while Hong Kong's Hang Seng Index was 0.1% down at 18,877.33.

In deal news, hospital operator IHH Healthcare Bhd. had a strong debut in Singapore and Malaysia, with the company's shares in Malaysia up 9.1% compared with its IPO.

Cheung Kong Holdings, Li Ka-shing's flagship property developer, fell 0.9% after the company announced that it would lead a consortium to purchase UK gas distribution company MGN Gas Networks for 645 million pounds sterling.

The NZX-50 edged lower to 3,458.97, but the market outperformed regional bourses thanks to a 1.6% rise in Telecom Corp. of New Zealand.

Base metals closed mostly a touch higher on the London Metal Exchange as a more stable tone in wider financial markets allowed the complex to find its feet. Crude oil futures prices rallied in response to a rebound in equities prices, shaking off bearish US oil inventory data to settle modestly higher.