Stocks Slump as Tesla, LVMH Earnings Disappoint: Markets Wrap

(Bloomberg) — Stocks slumped on lackluster results from Tesla Inc., LVMH and Deutsche Bank AG, fueling concern about the health of global business as the reporting season kicks into overdrive. Nasdaq 100 index futures sank almost 1% in early trading.

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LVMH tumbled 5% after sales in China plummeted during the quarter, adding evidence that an economic slowdown is hurting European companies. Deutsche Bank AG dropped on its first quarterly loss in four years and scrapping plans for a buyback. Tesla shares fell 8% in extended New York trading after posting a fourth straight quarter of disappointing earnings.

Analysts are pouring over a raft of earnings due this week as they hunt for signs that the tech-driven rally of the first half of the year has longer to run. The market is facing pressure into the seasonally weak summer months, with volatility also likely to be heightened by uncertainty as the the US presidential race gathers pace.

“After the runup we’ve seen in global equities year to date, investors are looking for opportunities to take some profit,” Eli Lee, chief investment strategist at Bank of Singapore Ltd., said on Bloomberg Television. “Though we think tech earnings are going to be fairly resilient over the next few weeks, we may see some volatility.”

Treasuries yields edged lower as investors awaited US debt auctions and manufacturing PMI data.

Earnings expectations from the so-called Magnificent Seven — comprising Tesla, Alphabet, Apple Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Nvidia Corp. — are high. Analysts project profits at these companies to have jumped 30% in the second quarter, compared with a 10% increase for the S&P 500 as a whole, according to data compiled by Bloomberg Intelligence.

In Europe, LVMH shares dropped to a six-month low after a disappointing set of results signaled that even the strongest brands are succumbing to a slowdown in demand for high-end items. Analysts flagged a hit from currency movements as well as weakness in China.

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Deutsche Bank lost 7%. Germany’s largest bank said trading slowed and that it would most likely refrain from conducting a second share buyback this year, after a €1.3 billion ($1.4 billion) litigation provision tied to its Postbank retail unit.

In Asia, most shares of Tesla suppliers and electric vehicle peers also declined. Taipei’s bourse was shut due to Typhoon Gaemi, meaning shares of tech giant Taiwan Semiconductor Manufacturing Co. didn’t trade.

The Japanese yen strengthened past 155 per dollar for the first time since early June as traders repositioned for the possibility the central bank will raise interest rates in coming months, if not at next week’s policy meeting.

Oil rose, snapping a run of losses, after an industry report indicated that US crude inventories fell for a fourth week.

Key events this week:

Canada rate decision, Wednesday
US new home sales, S&P Global PMI, Wednesday
IBM, Deutsche Bank earnings, Wednesday
Germany IFO business climate, Thursday
US GDP, initial jobless claims, durable goods, Thursday
US personal income, PCE, consumer sentiment, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 0.6% as of 8:27 a.m. London time
S&P 500 futures fell 0.6%
Nasdaq 100 futures fell 1%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index fell 0.5%
The MSCI Emerging Markets Index fell 0.3%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0848
The Japanese yen rose 0.5% to 154.81 per dollar
The offshore yuan was little changed at 7.2838 per dollar
The British pound fell 0.1% to $1.2895

Cryptocurrencies

Bitcoin rose 0.3% to $66,034.07
Ether fell 0.9% to $3,450.55

Bonds

The yield on 10-year Treasuries declined one basis point to 4.24%
Germany’s 10-year yield was little changed at 2.44%
Britain’s 10-year yield was little changed at 4.13%

Commodities

Brent crude rose 0.4% to $81.33 a barrel
Spot gold rose 0.3% to $2,416.02 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jason Scott, Paul Allen, Avril Hong and Georgina McKay.