Apple soars
Record results
Apple boss Tim Cook's longstanding confidence in his company's ability to maintain its growth record appears to be being vindicated, but it has also raised questions over how it can top its latest quarterly figures. The tech giant posted blowout quarterly figures this week which surpassed all analyst expectations as it recorded the most profitable quarter in corporate history. The company made profits of $18bn on sales of $75bn during the three months to December as its larger iPhone6 gained traction in developed markets and the company also benefited from its foray into China. After the festive season, sales are expected to fall back in the current quarter, but forecasts of 55m iPhone sales would still potentially represent its second best quarter ever.
Russia junked
Downgrade
The latest ignominy to be thrust upon Russia by the West came this week. Ratings agency Standard & Poor's cut its rating on Russian government investment-grade credit to 'junk' status. This reflects the ongoing hardship the Russians are suffering at the hand of the oil price slump and western sanctions, which have hobbled its economy and are likely to prompt a sharp reversal in GDP growth during 2015. The Russian authorities are also planning a major injection of up to $15bn of fresh capital into its banking system in an attempt to forestall its collapse.
Cooling off
GDP slows
The UK's buoyant economic recovery lost a little momentum in the final quarter of 2014. After surging 0.7 per cent in the third quarter, UK GDP grew by 0.5 per cent in the final three months of the year, below expectations of 0.6 per cent. Still, Chancellor George Osborne hailed the 2.6 per cent overall growth rate for the year as evidence that the UK's growth was "the fastest of any major economy". It was also the best annual performance since before the financial crisis in 2007. The services sector remains dominant, and it grew 0.8 per cent in the period while the construction and manufacturing sectors saw their output dip.
Dollar danger
US slowing?
Is the strong US dollar likely to become a millstone around the necks of corporate America? Earnings figures from a number of US bellwethers this week disappointed on the downside as the twin effects of the falling oil price and the strong dollar caused issues for a number of companies. Among those disappointing investors this week were Caterpillar, Microsoft and Procter & Gamble, while the overriding economic weakness in Europe and currency moves also played havoc with figures from European heavyweights Philips and Siemens. Meanwhile, durable goods orders in the US dropped by 3.4 per cent in December, accelerating after November's 2.1 per cent contraction. These are often seen as a proxy for the health of the corporate sector.
Housing wobble
Doubts rise
According to research by home-selling website Zoopla, UK homeowners expect house prices to appreciate by 7.2 per cent between now and June. But concrete data on the housing market suggests this may end up being wishful thinking. Even before we factor in the traditional pre-election hiatus in the housing market, volumes have been shrinking fast, with the latest mortgage data from the British Banking Association showing that lending for home loans fell again in December, to its lowest rate since April 2013. Meanwhile, the central London boom appears to be on the wane, illustrated by estate agency Foxtons reporting a 25.7 per cent fall in sales commission in the fourth quarter of 2014.
Consumer relief
Cash boost
The falling oil price, recent cuts to energy bills and the ongoing war in the aisles of the grocery sector are all adding up to a boost in the pocket of UK consumers. Income tracker research by the Centre for Economics and Business Research this week indicated that the UK consumer has more spending power now than at any time since the tracker began in the depths of the recession in 2008-09, after a 7 per cent increase in discretionary spending power in December when the average UK family had £15 a week more to spend than the previous year. This situation is likely to have improved further in the weeks since the turn of the year. Meanwhile, research by Hargreaves Lansdown estimates that the fall in the price of petrol is likely to produce total savings of £5.3bn a year.
