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Today's Markets: Stocks down, Apple delivers

European and US stock markets decline, as Apple delivers strong quarterly figures
Today's Markets: Stocks down, Apple delivers
  • FTSE 100 falls 1 per cent
  • Apple quarter results beat top and bottom line
  • Tesla declines 11 per cent

Markets

European stocks slipped in early trade as markets continue to chop in the wake of the recent discounting. The FTSE 100 is off almost 1 per cent, less than peers, with the DAX -1.3 per cent and Stoxx 50 -1.2 per cent. US markets were mixed yesterday with the Dow flat, S&P 500 down 0.54 per cent, the Nasdaq –1.4 per cent and Russell 2k –2.2 per cent. Futures for the small caps index indicate new cycle low, weakest since December 2020, but the rest are holding within Monday’s range – no new highs, no new lows. Some indecision – 3 per cent intraday swings are becoming common - but it was the tenth straight day where decliners outpaced advancers... selling continues. Earnings so far are good with 80 per cent of the 145 companies in the S&P 500 that have reported so far beating estimates but the market has other things on its mind. Trash is still trash: COIN –5 per cent, MSTR –10 per cent, ARKK –4 per cent and Tesla (TSLA) –11 per cent (see below). 

US GDP came in bigger than expected at +6.9 per cent vs 5.5 per cent forecast... huge inventory build over the quarter which is maybe not such a great signal for Q1 2022. Ian Shepherdson at Pantheon says: "Hugely flattered by inventories; Q1 GDP will be much weaker." Instinctively I agree and it suggests the Fed needs to crack on with the tightening as tailwinds are easing... PMIs and retail sales remember? Other data was fine but not inspiring: initial jobless claims in line at 260k; durable goods orders down -0.9 per cent vs the expected –0.5 per cent decline; pending home sales down –3.8 per cent vs –0.2 per cent estimate – lack of supply. Today is PCE inflation day.

Inflation is the drag on the economy! And the Fed is worried it’s gone so slow it’s now hiking into not just market turmoil but also recessionary indicators... stagflation klaxon. The Fed ‘put’ is dead... all the market and the Fed can hope for is soft landing: inflation eases right back, supply chain problems are fixed, fewer hikes needed and we can all say Jay is a genius... only this is not the most likely outcome so yields are looking like they could invert and everyone is running for cover. Energy still the brightest spot – commodities are good but energy is also the one place where you can rely on dividends and buybacks whatever the Fed is doing to the discount rate. Don’t fight the Fed or the tape seems to be front of mind right now... Omicron and Russia it ain’t. 

Elsewhere, the dollar continues to find bid and made a fresh high, its best since Jun ‘20. That’s leaving majors under pressure...commodity/risk/haven...whatever, the dollar is on the march and indicators still bullish.

Neil Wilson is the Chief Market Analyst at markets.com