| London stocks fell in early trade on Friday, taking their cue from losses in Asia as earnings from US tech companies disappointed.
CMC Markets analyst David Madden said: “We heard from tech giants Amazon and Alphabet after the closing bell last night. Amazon topped the earnings per share forecast, but missed on revenue and the guidance. Google’s parent, Alphabet, exceeded estimates on EPS, but undershot the revenue forecast.
“Both stocks dropped heavily in the post-market session, and in turn sparked selling across major US indices. Asian stock markets have been dragged lower by the sharp decline in US index futures.”
There are no major UK data releases but in the US, third-quarter domestic product will be eyed at 1330 BST. Economists expect a reading of 3.3%, which would be a slowdown from 4.2% growth in the second quarter.
In corporate news, Royal Bank of Scotland was in the red as it said profits rose in the third quarter but operating margins continued to be squeezed by competitive pressures.
Lee Wild, head of equity strategy at Interactive Investor, said: “Whether or not Royal Bank of Scotland made more money than many expected in the third quarter depends on which line on the income statement you look at, but whichever it is, weary investors have lost faith with RBS after these results.
“A third-quarter operating profit of £961m was better than the £892m consensus estimate, as was a 15.4% increase in income. But despite a significant improvement on previous quarters, a £448m attributable profit was definitely sub-par,” he said.
“Aggressively fighting for share of the residential mortgage market has had an inevitable impact on net interest margin, which was down 8 basis points on the second quarter at 1.93%. Strip out one-off items and it was still down 5 basis points, but the year-on-year decline is more like 19 basis points. Higher interest rate did boost deposit margins, but not nearly enough.”
Mining conglomerate Glencore fell as it said third-quarter copper production rose and lifted its full-year copper guidance, but cut its full-year oil output guidance, while Segro ticked a touch lower after saying it has exited the Belgian market.
On the upside, British Airways and Iberia parent International Consolidated Airlines Group flew higher as its third-quarter operating profit and revenue beat estimates.
International PPL nudged up after announcing that it will invest as much as £9.9m into Nextgenaccess, a developer of ultrafast wholesale and custom fibre infrastructure.
In broker note action, Burberry was lifted to ‘hold’ from ‘reduce’ at HSBC, while Lloyds Banking Group was lifted to ‘neutral’ from ‘underperform’ by Macquarie. 888 Holdings was upgraded to ‘hold’ from ‘sell’ by Investec. |
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