With a weak lead from US markets in which the Dow Jones fell 1% for the first time in two months, UK and European markets dropped on Friday as investors waded through corporate earnings.
Italy’s ENI (MI:ENI) disrupted what was heading for a clean sweep of oil majors beating earnings expectations, with negative implications for Exxon (NYSE:XOM) and Chevron (NYSE:CVX) which report later today and Royal Dutch Shell (LON:RDSa) next week. ENI’s results now have markets second-guessing oil companies’ ability to slash costs enough to survive the decline in oil prices.
The energy sector is the biggest laggard on the FTSE 100 after ENI’s results, despite oil prices rising to another fresh high for 2016, with Brent crude at its highest since November 5.
Shares of Royal Bank of Scotland (LON:RBS) are lower by 1% after the bank reported that losses had doubled to nearly £1bn. The loss would have been more bearable since it pertained to paying the UK government £1.2bn to remove the Dividend Access Share in order to be able to start paying dividends again. However, the delay to its separation of Williams and Glyn likely means a delay to paying a dividend anyway.
US stocks look set for a higher open, helped by strong technology company earnings from Amazon (NASDAQ:AMZN) and LinkedIn (NYSE:LNKD) which have caused a disproportionate boost to the Nasdaq.
LinkedIn smashed earning expectations and shares look set to open up double digits. The results are actually quite odd. Last quarter the stock nosedived 40% in one day because LinkedIn issued weak guidance for this quarter, which they have now far exceeded. Investors will be relieved at the strong earnings, but are still well down on the year, and would probably have preferred a less rocky ride with more accurate guidance.
Shares of Amazon are expected to jump 12% and erase yearly loss on the open. The company has now been profitable for 4th quarter in a row despite massive expansion ($29bn in revenue vs $22bn last year) thanks to its cloud computing unit, Amazon web services.
USA pre-opening levels
S&P 500: 4 points higher at 2,079
Dow Jones: 25 points higher at 17,855
Nasdaq 100: 25 points higher at 4,388
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.