Markets flat as Apple disappoints
Market Movers
techMARK 2,232.35 +0.09%
FTSE 100 6,206.77 +0.15%
FTSE 250 12,976.72 +0.33%
UK
stocks opened broadly flat on Thursday morning as a disappointing
earnings report from the world's largest technology company weighed on
sentiment early on.
US tech titan Apple saw
shares tumble after the closing bell in New York last night after
fourth-quarter results missed forecasts. Revenue came in at a record
$54.5bn but less than the $55bn expected.
Shares fell as much as
10% in after-market trading after Apple revealed flat profits and
lower-than-expected iPhone sales. Analysts predicted that iPhone sales
would break the 50m mark, following the release of the iPhone5 in
September, but Apple reported sales of 47.8m during the quarter.
"The bulls and bears are in that case involved in a tug-of-war, leaving European markets flipping between small gains and losses. Apple's
disappointing 4Q earnings release out after the US closing bell placed a
degree of pressure on US futures overnight and hampered enthusiasm in
Asian markets too," said market strategist Ishaq Siddiqi from ETX
Capital.
"Apple reported its slowest profit growth since 2003; expect weakness in European tech stocks today as a result," he said.
In other news, the Chinese HSBC flash manufacturing purchasing managers' index rose to a two-year high of 51.9 in January, from 51.5 the month before. Analysts were expecting a figure of 51.7.
"The
increase was driven by domestic demand, which should ease some fears
from some that a lack of external demand, due to the slowdown in the US
and the Eurozone, would make the recent improvement in China
unsustainable," said chief market analyst James Hughes from Alpari.
"That
being said, we’re going to have to see more numbers like this in the
months ahead before we get carried away with the data."
Markets were also digesting a barrage of economic data from
Europe this morning: services and manufacturing data from France missed
expectations, while figures from Germany and the wider Eurozone in
general managed to beat forecasts. Jobless claims and manufacturing data
from the US is due out later on.
ARM, Imagination hit after Apple disappoints
Chip designers ARM Holdings and Imagination Technologies was heavy faller this morning after Apple disappointed the market last night.
Utilities stocks were providing a lift this morning after a series of broker upgrades. HSBC upped its rating for Centrica to 'overweight', while Bank of America Merrill Lynch raised its recommendation for both Severn Trent and United Utilites to 'neutral'.
Budget airline easyJet was
flying high after total revenue jumped 9.2% to £833m in the first
quarter. CEO Carolyn McCall said: "easyJet has made a strong start to
the year due to a combination of management action, competitor capacity
reductions and the benign operating environment."
High Street bakery Greggs gained
after appointing Roger Whiteside, the current Punch Taverns CEO, as its
new frontman. The pubs group saw shares tumble however.
Drinks group AG Barr rose after saying that sales in the final quarter of the year are expected to rise 5%, with full-year sales up 7%.
High Street betting shop Ladbrokes impressed
with its acquisition of Global Betting Exchange Alderney (GBEA) for
€30m, which will see it get its hands on the Betdaq exchange,
accelerating the firm's strategy to grow digital revenues through
technology investment.
Transport group FirstGroup was
higher after third-quarter trading was in line with expectations, with
like-for-like passenger revenue up 2.1% in the UK bus division.
| AIM/Small Cap Report |
FTSE 100 - Risers Croda International (CRDA) 2,421.00p +2.67%
Associated British Foods (ABF) 1,694.00p +1.50%
Severn Trent (SVT) 1,624.00p +1.25%
Rio Tinto (RIO) 3,542.00p +1.17%
Smith & Nephew (SN.) 727.50p +1.04%
Pearson (PSON) 1,180.00p +1.03%
WPP (WPP) 966.50p +0.99%
United Utilities Group (UU.) 724.50p +0.98%
Next (NXT) 4,045.00p +0.95%
Anglo American (AAL) 1,886.00p +0.91%
FTSE 100 - Fallers BAE Systems (BA.) 339.00p -0.82%
ARM Holdings (ARM) 843.00p -0.77%
BT Group (BT.A) 248.90p -0.72%
Marks & Spencer Group (MKS) 376.40p -0.71%
Serco Group (SRP) 558.00p -0.71%
Vedanta Resources (VED) 1,173.00p -0.68%
Wood Group (John) (WG.) 830.50p -0.60%
Burberry Group (BRBY) 1,361.00p -0.58%
Eurasian Natural Resources Corp. (ENRC) 339.20p -0.56%
Tesco (TSCO) 350.85p -0.55%
FTSE 250 - Risers easyJet (EZJ) 885.00p +3.51%
Ladbrokes (LAD) 206.30p +3.46%
Chemring Group (CHG) 292.00p +3.36%
Pace (PIC) 226.60p +3.00%
St. Modwen Properties (SMP) 231.50p +2.84%
Heritage Oil (HOIL) 200.00p +2.72%
Britvic (BVIC) 439.90p +2.28%
William Hill (WMH) 364.50p +2.24%
Electra Private Equity (ELTA) 2,137.00p +2.20%
Bwin.party Digital Entertainment (BPTY) 103.50p +2.17%
FTSE 250 - Fallers ICAP (IAP) 312.20p -4.56%
Laird (LRD) 223.80p -3.37%
Tullett Prebon (TLPR) 244.50p -3.32%
Imagination Technologies Group (IMG) 449.20p -3.21%
Afren (AFR) 147.50p -2.96%
Polar Capital Technology Trust (PCT) 373.80p -1.89%
Kentz Corporation Ltd. (KENZ) 420.50p -1.29%
Morgan Crucible Co (MGCR) 284.80p -1.18%
Mondi (MNDI) 713.50p -1.18%
Kenmare Resources (KMR) 33.97p -1.11%
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| UK Calendar |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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INTERIM DIVIDEND PAYMENT DATE
Dairy Crest Group, Tongaat-Hulett Ltd.
QUARTERLY EX-DIVIDEND DATE
Marsh & Mclennan Cos Inc.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Payments (EU) (09:00)
ECB Interest Rate (EU) (12:45)
Spanish Unemployment (Q4) (08:00)
Eurozone Manufacturing/Service sector PMIs (Jan.) (09:00)
US Initial Jobless Claims (Jan 19) (13:30)
US Leading indicators (Dec.) (15:00)
FINALS
Chemring
GMS
Mam Funds
IMSS
easyJet, Invensys, Carphone Warehouse, First Group
AGMS
Botswana
Diamonds, Invesco Leveraged High Yield Fund Ltd., Octopus VCT 3,
Octopus VCT 4, Scottish Oriental Smaller Companies Trust, Sinclair
(William) Holdings, Smiths News
TRADING ANNOUNCEMENTS
Barr (A.G.)
UK ECONOMIC ANNOUNCEMENTS
BBA Mortgage Lending Figures (09:30)
CBI Distributive Trades Surveys (11:00)
Speech MPC by Member Martin Weale (17:30)
Speech Andy Haldane, Executive Director of Financial Stability BoE (06:00)
FINAL DIVIDEND PAYMENT DATE
Aberdeen Asset Management
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| US Market Report |
Stocks Extend Upward Move On Upbeat Earnings News
With
traders reacting positively to the latest batch of earnings news,
stocks saw modest strength during trading on Wednesday. The gains on the
day extended a recent upward move by the markets, although buying
interest was somewhat subdued.
The
major averages all ended the day in positive territory, with the Dow and
the S&P 500 reaching new five-year closing highs. The Dow rose 66.96 points or 0.5 percent to 13,779.17, the Nasdaq climbed 10.49 points or 0.3 percent to 3,153.67 and the S&P 500 edged up 2.22 points or 0.2 percent to 1,494.78.
The
strength on Wall Street came as traders largely reacted positively to
the latest earnings news, with upbeat quarterly results from some
big-name companies inspiring confidence that the markets can sustain
some further upside. Tech giants IBM Corp. (IBM) and Google
(GOOG) both posted notable gains after reporting fourth quarter earnings
that exceeded analyst estimates. IBM rose by 4.4 percent, while Google
advanced by 5.5 percent.
McDonald's
(MCD) posted a more modest gain after the fast food giant reported
fourth quarter earnings that rose year-over-year and came in above
analyst estimates. The company also reported stronger than expected
revenue growth.
Fellow Dow component United Technologies (UTX)
reported fourth quarter earnings that fell compared to the year-ago
quarter but still came in slightly above expectations. The diversified
conglomerate also reaffirmed its guidance for 2013.
Shares of iPad and iPhone maker Apple (AAPL) ended the day up by 1.8 percent ahead of the release of its fiscal first quarter results after the close of trading.
The
markets also benefited from positive sentiment generated by news that
the House voted to approve a bill that would temporarily suspend the
U.S. debt limit for nearly four months.
The House voted
285 to 144 to approve the legislation, called the "No Budget, No Pay
Act," which ties the suspension of the federal debt limit to the passage
of a budget plan by both the House and the Senate. If a budget
resolution is not passed by April 15th, the salaries of the members of
the chamber that does not act will be placed in an escrow account until a
budget is approved. Nonetheless, buying interest was relatively
subdued, as traders were somewhat reluctant to continue buying stocks
following the recent strength.
Sector News
With IBM helping
to lead the way higher, computer hardware stocks saw considerable
strength on the day. The NYSE Arca Computer Hardware Index surged up by
1.9 percent to its best closing level in eight months.
Railroad stocks
also moved notably higher over the course of the session, driving the
Dow Jones Railroads Index up by 1.8 percent. CSX Corp. (CSX) turned in
one of the railroad sectors best performances after reporting better
than expected fourth quarter results.
Semiconductor and housing
stocks also saw significant strength, while gold stocks came under
pressure on the day. The NYSE Arca Gold Bugs Index fell by 2.9 percent
due in part to a steep drop by shares of Iamgold (IAG). healthcare
provider, biotechnology, and brokerage stocks also moved to the downside
on the day, partly offsetting the strength in other sectors.
Other Markets
In
overseas trading, stock markets across the Asia-Pacific region turned
in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.1 percent, while China's Shanghai Composite Index rose by 0.3 percent.
In
the bond market, treasuries ended the day roughly flat after failing to
sustain an early upward move. Subsequently, the yield on the benchmark
ten-year note, which moves opposite of its price, edged down by less
than a basis point to 1.833 percent.
Looking Ahead
Earnings
news is likely to remain in focus on Thursday, with reaction to Apple's
quarterly results likely to have a significant impact on
trading. Trading could also be impacted by reaction to quarterly results
from 3M (MMM), United Continental (UAL), and KeyCorp (KEY), which are
among the companies due to release their results before the start of
trading. Economic data may also attract some attention on Thursday, with
traders likely to keep an eye on reports on weekly jobless claims and
leading economic indicators.
|
| Thursday newspaper round-up |
ICAP, Apple, Japan...
ICAP,
the world’s largest interdealer broker, has reportedly become a focus
of the UK Libor rate-rigging investigation and is being investigated by
the Financial Services Authority for possible breaches of market conduct
rules. The UK financial watchdog has asked seven of around 50 people
working on its London Interbank Offered Rate investigation to focus on
ICAP, according to an internal FSA memo seen by the Financial Times. The
newspaper also reported ICAP has been under formal investigation since
at least March 2012. The FSA could not be reached for comment last night
and ICAP declined to comment. [The Telegraph]
Investors in Apple were
left unimpressed with the tech giant's share price slumping in
after-hours trading after it missed Wall Street hopes for iPhone sales
and revenues, reviving concerns about future growth that have already
driven down its stock by more than a quarter since its peak in
September. The Californian firm shifted 47.8 million iPhones in the 13
weeks to the end of December, against some analysts' expectations of
around 50 million, while it sold around 23 million iPads. Revenues,
meanwhile, rose to $54.5bn, which though healthy – the figure was up by
double digits – was lower than an average forecast of around $54.7bn. [The Independent]
Japan recorded
a record Y6.9tn ($77bn) trade deficit in 2012 as the cost of importing
fuel rose following the Fukushima disaster, and a strong yen and
frictions with China weighed on exports. The trade deficit, announced by
the finance ministry on Thursday, was the second in two years. Before
2011, the home of global manufacturing powerhouses such as Toyota and
Panasonic had not bought more goods and services abroad than it sold
since 1980.[Financial Times]
McDonald’s will
create another 2,500 jobs in Britain this year as it opens up to 20
stores and extends its trading hours. The fast-food chain, which created
3,500 jobs last year, said that the vast majority of the new positions
would be entry-level roles, with about two thirds going to people under
the age of 21. Jill McDonald, chief executive of McDonald’s UK, said
that having opened 16 stores last year, taking its total to more than
1,200, the group would “push up the pace”. She said that the company
would continue to increase the number of stores moving to 24-hour
opening, creating at least 15 additional jobs at each store. McDonald’s
UK has created more than 20,000 jobs over the past five years. It said
that this year’s hirings would push its workforce to 93,500, many of
whom are completing apprenticeships and other vocational qualifications.
[The Times]
Job vacancies have
surged to their highest level since the global downturn began in 2008
as the labour market continues to confound commentators and defy the
economic gloom. Despite a string of high street casualties and fears
that the country is on the verge of tipping into a tripledip recession,
the jobs market appeared yesterday to be alive and kicking. Vacancies
jumped by 10,000 in the final quarter of last year to hit 494,000, the
highest since the end of 2008. [The Times]
The pound could
face sustained pressure on the foreign exchange markets, experts warned
on Wednesday, as David Cameron pledged to hold a referendum on
Britain's membership of the EU against the backdrop of a weak UK
economy. Sterling had dipped to its lowest level against the dollar in
nearly five months as Cameron spoke, although it bounced a little
afterwards following the publication of data showing a fall in
unemployment in the three months to December. But by setting out the
case for Britain to remain in the 27-member union, the prime minister
gave a small comfort to investors who have been selling out of sterling
since the start of year and have made the UK currency one of the worst
performers of any G10 country so far this year. [The Guardian]
Britain's business leaders sympathise with the political pressures on David Cameron over Europe but warned the prime minister on Wednesday that he needed to tackle the uncertainty caused by the promise
of an in-out referendum in 2017. Executives at the World Economic Forum
in Davos responded cautiously to Cameron's long-awaited speech,
expressing concerns – but not widespread alarm. Sir Martin Sorrell,
chief executive of the multinational advertising companyWPP,
was among the most anxious, identifying the possibility of Britain
leaving the European Union as one of the five major threats to the
global economy as it struggles to emerge from financial crisis,
recession and a half-decade of weak growth. [The Guardian]
Britain's shops are
shutting at a record rate and the collapse of Blockbuster, HMV and
Jessops will make the situation even worse in the coming months,
according to data published today. The number of stores in the UK fell
by 3.6 per cent year-on-year between October and December, the biggest
drop since the British Retail Consortium (BRC) began issuing its retail
employment monitor in 2008. In December alone, 573 shops shut their
doors for the final time, with experts warning the figure could rise
further. [The Scotsman]
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