European markets were flat in early trading on Monday, a continuation of what has been directionless trading ahead of the April FOMC meeting. Disappointing Q1 results from Apple (NASDAQ:AAPL), the world’s largest company has offset positively from earnings from Barclays (LON:BARC).
Oil prices are at the highest they’ve been all this year after the World Bank upgraded its 2016 oil price forecast to $41 attributing it to better sentiment and a weaker US dollar.
First quarter earnings from Barclays were well-received by investors as shares gained 3% on relief over resiliency in the investment banking unit in a volatile quarter for financial markets. The share price gains came despite group profits slumping 25%. CEO Jeff Staley was optimistic on the bank’s progress on selling its non-core assets and said a 15% rise in credit impairment charges related to the oil and gas sector remained “well-managed.”
Shares of ARM Holdings (LON:ARM), a leading Apple chip supplier were higher on relief that, despite having a first year-over-year decline, iPhone shipments were actually higher than expected.
The British pound was unchanged for the day after data showed UK GDP growth slowed in the first quarter to 0.4% from 0.6% in line with forecasts. Cable dipped into the news release but regained its losses when the annual figure beat expectations by remaining at 2.1% y/y. Services remained the main driver of growth, rising 0.6% and showing no signs of ‘Brexit caution.’
US markets look set for a weaker start, largely attributable to an expected decline of 8% on the open for Apple after disappointing first quarter earnings
Apple shares were down 8% in afterhours trading, erasing a whopping $46bn in market cap after the iPhone-maker missed profit and revenue estimates for the first quarter. It was the first quarterly revenue decline in 13 years for Apple and gloomy guidance for next quarter suggests things aren’t about to improve anytime soon.
Apple’s had its critics from day-one who said that it was a one-trick pony and that iPhone sales couldn’t rise indefinitely, so after 13 years they’ve got it right. Investors will be looking for evidence that this is just a blip caused by tough yearly comparisons because of the launch of the iPhone 6 and that demand will pick up once the new iPhone 7 is released. Nonetheless, it does appear Apple has reached an inflexion point. Apple now needs a new ground-breaking product, like a car, to justify a higher price multiple.
Notable earnings before the US open: Comcast (NASDAQ:CMCSA), Boeing (NYSE:BA), United Technologies (NYSE:UTX), Mondelez (NASDAQ:MDLZ), Baker Hughes (NYSE:BHI)
Notable earnings after the close: Facebook (NASDAQ:FB), PayPal (NASDAQ:PYPL), Texas Instruments (NASDAQ:TXN), Marriot (NASDAQ:MAR), SanDisk (NASDAQ:SNDK)
USA pre-opening levels
S&P 500: 3 points lower at 2,088
Dow Jones: 32 points lower at 17,958
Nasdaq 100: 42 points lower at 4,410
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