FTSE 100 Live: Tech giants under pressure after earnings updates
The improved stock market mood is under strain today after earnings updates by tech giants Apple, Google owner Alphabet and Amazon.
A poor holiday season for iPhone maker Apple was blamed on supply chain issues as China’s Covid lockdowns caused a slower rollout of new products.
Google’s parent company missed on quarterly revenues and Amazon shares fell 5% in after-hours trading, despite beating sales expectations.
FTSE 100 Live Friday
Apple misses sales and profit targets
US jobs figures set to fall
M&S shares upgraded by City bank
Wall Street stocks stumble after strong jobs report
Friday 3 February 2023 15:23 , Simon Hunt
Stocks slid in the opening minutes of trade on Wall Street after a stronger-than-expected jobs report raised investor fears of further interest rate rises.
The S&P 500 and the Nasdaq both fell 0.4%, while the Dow fell 0.2%.
Tech stocks were especially hard-hit, after a gloomy picture painted by earnings updates from Amazon and Google. They dropped 4.6% and 1.3% respectively.
US jobs data smashes through forecasts dispelling recession fears but pointing to longer run of rate rises
Friday 3 February 2023 13:47 , Michael Hunter
The US economy created over half a million jobs in January, as one of the most closely watched economic indicators on the calendar powered through forecasts.
Official data showed 517,000 posts were added to non-farm payrolls in the world’s biggest economy, significantly more than the 185,000 expected. It helped take the jobless rate down to 3.4%, its lowest for over 50 years.
The upbeat numbers came just days after the Federal Reserve halved the size of its interest rate hike to 0.25% as it fights inflation. While the data points to underlying resilience in the US economy, it may also be so strong as to encourage a longer progaramme of rate rises from the Fed.
That left the stock maket looking cautious after the numbers, with futures trade pointing to a fall of 45 point for the S&P 500 in opening trade, enough to take the broad stock index down 1%.
FTSE 100 mid-session movers: Centrica the biggest faller as pre-payment meters scandal rumbles on
Friday 3 February 2023 13:36 , Michael Hunter
Shares in the owner of British Gas, Centrica, were stranded at the bottom of the FTSE 100 on Friday, as the ongoing scandal around it forcing vulnerable customers onto pre-payment meters left investors dumping the stock.
Discount retailer B&M topped the leaderboard after upbeat comment on the stock -- and the sector -- from Deutsche Bank. Analysts there lifted their price target for B&M shares to 580p from 460p.
Steve Bartlett’s Social Chain sold for £7.7 million
Friday 3 February 2023 13:00 , Simon Hunt
A viral marketing company founded by Dragons’ Den investor Steven Bartlett when he was aged just 21 has been sold for £7.7 million.
It has been bought by Brave Bison, another social media business.
Bartlett founded Social Chain in 2014 but left in 2020. It owns a number of popular social media accounts, which it uses to promote brands like Amazon, TikTok and KFC.
Social Chain merged with German retailer Lumaland in 2019 to form The Social Chain AG.
The combined company debuted on Frankfurt Stock Exchange in 2021 with a valuation of €774 million (£690 million), but shares plummeted by more than 90% within a year.
The original Social Chain business, now being acquired, represented less than 10% of the wider group’s revenues.
‘Fin-fluencers' offering illegal advice face FCA crackdown
Friday 3 February 2023 12:56 , Michael Hunter
London’s main market watchdog has warned of so-called “fin-fluencers” providing unauthorised investment advice on social media, after the number of misleading ads it blocked increased 14-fold in 2022.
The Financial Conduct Authority banned 8,582 promotions in 2022, up from 573 a year earlier. Many of these, the FCA noted, concerned social media finance influencers, who have been “a growing concern for the regulator”.
M&S upgrade boosts shares, Darktrace up 3% after CEO purchase
Friday 3 February 2023 10:19 , Graeme Evans
Marks & Spencer shares have made further progress after a City bank backed the high street chain to continue its revival during 2023.
Alongside an updated “buy” recommendation for M&S, Deutsche Bank’s report on European retail favoured Primark owner AB Foods and B&M European Value Retail as the pair look set to capture sales from consumers trading down.
The bank is less keen on B&Q owner Kingfisher, which it downgraded on expectations that a weaker housing market and higher interest rates will reduce project spend.
Borrowing costs are seen as less of an issue for M&S as its older customer base is more likely to benefit from higher savings rates than rising mortgage bills.
Deutsche Bank adds that M&S now has a store model that works for both clothing and food. It said: “M&S has already started to reverse long term market share declines in clothing and with investment in technology, store environment and pricing discipline we expect this to carry on in 2023.”
The bank’s upgrade and target price of 210p helped M&S shares continue their recent progress, having jumped more than 10% this week. The FTSE 250-stock lifted another penny to 162.1p, compared with 93p in October.
B&M European Value Retail was the best performer in the FTSE 100 after today’s upgrade in target price to 580p sent shares up 9.1p to 486.2p. Kingfisher fell 3.3p to 288.3p.
While 2023 is unlikely to be a great year for consumers, Deutsche Bank said the retail outlook was “noticeably less chilly” after a stronger-than-expected finish to 2022.
The UK optimism yesterday helped the FTSE 250 index to surge 3.4%, although profit-taking and disappointing updates from Wall Street tech giants led to a downbeat session for the London market today.
The FTSE 100 index edged 17.62 points higher to 7837.78, but the second-tier benchmark lost 164.06 points to 20,450.63 as tech investor Molten Ventures and ASOS surrendered some of Thursday’s gains to fall 18.8p to 376.2p and 39p to 943p respectively.
Darktrace led the FTSE 250, rising 3% or 7.8p to 237.1p after it emerged that chief executive Poppy Gustafsson had spent more than £100,000 on the company’s shares at the end of a difficult week for the cyber security firm.
Upgrade lifts B&M shares, FTSE 250 falls back
Friday 3 February 2023 08:39 , Graeme Evans
An upbeat week for the London market is ending on a flat note, with the FTSE 100 index down 6.37 points at 7813.79 and the FTSE 250 standing 95.86 points lower at 20,518.83.
B&M European Value Retail is the best performing blue-chip stock after analysts at Deutsche Bank gave the discount retailer a “buy” recommendation and new target price of 580p. The shares lifted 10.2p to 487.3p.
The bank is less keen on the outlook for the DIY sector, prompting a decline of 5.4p to 286.1p for B&Q owner Kingfisher. Other fallers included British Gas business Centrica, which dropped 2% or 2.1p to 96p.
The weakness for the FTSE 250 index came as investors locked in profits following a 3.4% surge for the UK-focused benchmark in Thursday’s session. Today’s big fallers included tech-focused investor Molten Ventures, which gave up some of its recent gains to ease 19.8p to 375.2p, and fashion retailer ASOS after a decline of 40.5p to 941.5p.
Rates focus continues ahead of US jobs figures
Friday 3 February 2023 08:00 , Graeme Evans
Today’s figures on the state of the US jobs market at the start of 2023 will go some way to determining the approach of the US Federal Reserve to further interest rate rises.
Deutsche Bank economists are expecting non-farm payrolls in January to have grown by 175,000, which would be the weakest since the December 2020 contraction. This would be consistent with a pattern that’s seen declines for five consecutive months in a row.
December’s report saw 223,000 new jobs added, while the unemployment rate was down slightly to 3.5% and average hourly earnings below expectations after rising by 4.6%.
Michael Hewson, chief market analyst at CMC Markets, said: “There continues to be a sense that the market is extraordinarily complacent about how quickly we might see the Federal Reserve pivot when it comes to interest rates.
“However while the unemployment rate remains at multi-year lows the US central bank has little incentive to cut rates when inflation still remains almost three times higher than its 2% target.”
Tech disappointment slows market progress
Friday 3 February 2023 07:43 , Graeme Evans
A collective 1.25% of tightening by three central banks within 24 hours failed to prevent stock markets posting some impressive gains yesterday, with the FTSE 250 index one of the best performing after a jump of 3.4%.
The rally reflects hopes that inflation has peaked and that central banks will soon be able to pause interest rate hikes. The Bank of England also upgraded its growth forecast for the UK, with a shallower recession than previously expected for 2023 now on the cards.
However, disappointment over US earnings posted after Wall Street’s closing bell last night means the London market is expected to open flat and the Nasdaq 100 is forecast to give up a chunk of the gains posted yesterday.
The expected falls on Wall Street come after Apple missed both sales and profits targets partly because of lower demand for iPhones, while Google owner Alphabet also disappointed with its revenues performance.
Shares in the pair were higher in regular trading on Thursday, but then fell back 3% and 5% in after-hours dealings.
Hargreaves Lansdown analyst Sophie Lund-Yates said: “By its own admission, Apple is in a challenging spot, but share price losses have been reasonably muted given the circumstances because of the ongoing belief in the power of Apple’s brand and services ecosystem.”