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FTSE 100 index experiences first down week of 2019

A weekly run through of the key indices from Opto.

 

 

FTSE 100

 

British indices ended the week down for the first time in 2019, with the FTSE 100 dipping 3% through the week ending 25 January.

Hit by downbeat data from China, a number of large-cap stocks dragged on the main index, which is already fighting Brexit uncertainty.

Vodafone stock fell by 5% after it reported that group revenue fell by 6.8% to €10bn and warned that earnings will continue to drop throughout 2019. BP lost 1.6%, while Unilever lost 2%, with the rout continuing – and accelerating – into this week.

Continued gains for tech-infused stocks including Ocado, MoneySupermarket and JustEat prevented larger losses. Buoyed by a reported deal with M&S, Ocado gained a further 2% on Monday 28, having already gained near 10% last week.

“The index has been pushing lower since August, and while it remains below 7,000, the negative move should continue. 6600 might act as support,” says David Madden, analyst at CMC Markets.

“The index has been pushing lower since August, and while it remains below 7,000, the negative move should continue. 6600 might act as support” - David Madden, analyst at CMC Markets

 

S&P 500

The S&P 500’s four-week winning streak ended last week, with it dipping 0.2% to 2664.76 through the week ending 25 January, before losing a further 1.2% on Monday 28.

Despite a fifth of the index’s companies reporting fourth quarter earnings this month, showing an overall earnings growth of 10.9% and revenue rise of 6.1%, the index is flattening out on warnings of slowing global growth, ending its best start to the year since 1987.

10.9%

Overall earnings growth for S&P 500 companies that reported for Q4 this month

The International Monetary Fund lowered its world economic growth outlook during the week from 3.7% to 3.5%, citing escalating trade tensions and higher US interest rates.

While last week US markets jumped on news that trade talks between the US and China are improving, worries about the standoff and its impact on the global economy have returned and will be likely to cap the market’s upside.

Meanwhile, President Donald Trump’s agreement to temporarily end the US government shut down is yet to make a significant impact on the markets.

 

Nasdaq

Positive tech stocks have driven Nasdaq up for another week. The index gained 0.1% to 7164.86 by 25 January, outperforming the two other major US indices.

The index gained after strong earnings reports from a string of tech companies including Xilinx, Lam Research Corporation and Texas Instruments Incorporated, which all reported better-than-expected earnings.

Chipmaker Xilinx beat Wall Street estimates, earning 92 cents a share on sales of $800m instead of the expected $770.5m, sending its share price soaring by 8.5% in after-hours trading on Wednesday. Meanwhile Lam Research was up by 2.66% after reporting sales of $2.52bn, when it was expected to earn $2.44bn.

Texas instruments delivered $1.27 per share, beating estimates of $1.24.

8.5%

After-hours increase in Xilinx's share price after Q4 earnings beat

The sector is on the up ahead of expected earnings reports from Apple, Microsoft and Facebook this week.

Defence and tech stocks have been the biggest gainers in the two years since Trump’s inauguration. During this time the tech-heavy Nasdaq has seen a 26.4% increase.

 

Dow Jones

Extending gains for the fifth week in a row, The Dow edged up 0.1% for the week.

The news arrived after it was revealed that the Fed may stop reducing its bond holdings earlier than expected on Friday, putting an end to the central bank’s portfolio wind-down.

The index inched up 0.8% on the news, after starting the week with a loss. Its gains are flatter than the 3.3% bump it received last week largely due to a negative global outlook linked to tariff bottles.

Going into this week, things have taken a turn for the worse for the Dow, with the index loosing 4% on Monday 28.

Business leaders attending the World Economic Forum in Davos, in Switzerland, expressed worries with Trump’s policies and indicated that an escalation of the US, China trade war would sharpen an economic slowdown already underway.

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