Reuters Insider - Reuters Today: Twitter tumble, Sony sombre, CS miss
26/02/2014 13:25
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Description: Corporate gloom persists as Twitter, Sony and
Credit Suisse disappoint. This is a reset before
stocks kick higher, says Hargreave Lansdown's
Richard Hunter. Plus Draghi’s guessing game,
Carney's call.
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Transcript (May be auto-generated)
Corporate gloom from all corners of the globe. In the US, a fifth of Twitter's
value wiped out as sputtering user growth spooks investors. In Asia, Sony warns
of an annual net loss as it exits the PC business; 5,000 jobs set to go. And in
Europe, Credit Suisse misses expectations due to higher legal costs linked to
alleged tax evasion probes and the sale of mortgage-backed bonds. Very different
companies, different reasons of course for the gloom, but it's all playing a
part in the reset, if we can call it that, in the equity markets. Let's go to
Richard Hunter, Head of Equities at Hargreaves Lansdown. Can we call it a reset,
Richard? Yeah, I think it is a reset of expectations. We need to, of course, put
it in the context for the FTSE100, for example, a 6% rise in 2012 and a 14% rise
last year. There have been— those investors of course, who have been looking
for an excuse to take some profits and to lock that down. And what we really
needed for 2014 to be able to kick on further with some very strong company
reports quite apart from the macro side of things. And of course whilst on the
whole, company owning so far in the fourth quarter have tended to beat
expectations. There haven't been too many instances where companies have been
able to shoot out the lights. And that's given those investors exactly what they
were looking for namely a chance for some profit-taking. Alright.
So you're not overly concerned by this. What about the emerging market disorder
and the impact that's having on sentiment generally? Yes, that's something that
the US authorities are going to have to continue to be thinking about because
that's becoming slightly political now as well. But of course, as QE is tapered
further and eventually removed so we're seeing a repatriation of funds from
emerging markets back to the likes of the US, of course. I think again the
longer term story tends to be one which is intact but those slightly weaker
emerging economies are the ones that are feeling the pain at the moment. It's
the context of course, this disorder in emerging markets for the ECB. Is it too
early to force a policy move? Yeah, it's a difficult one. Obviously, we've got
an interest rate decision and accompanying comments from both the ECB and the
Bank of England today, not expecting too much from the Bank of England front.
There have been very vague rumors about some sort of further monetary easing
from the ECB. Well that's difficult to see what exactly what they can do at this
stage. Obviously, you've got high unemployment particularly in the likes of
Spain and youth unemployment there, of course.
But at least they have started to move the dial from worrying about debt in the
Eurozone to helping to propel growth. So that's going to be a positive step. And
just back to the equity market picture, when do you think things are going to
start picking up again? When do we bottom out with this correction we're seeing?
Well the problem is of course, the world's largest economy, the States, keeps
giving us mixed economic messages. The big elephant in the room is tomorrow's
nonfarm payrolls. We'll be hoping of course not for a repeat of the January
disappointment when set against expectations of 200,000 jobs, it came in at
74,000. Consensus for tomorrow is around 180,000, something like that. But
clearly – and there could also be some revisions to last month's numbers as
well – but clearly, there seems to be a mixed message coming through from the
States. And of course although the GDP figure was good a couple of weeks back of
course earlier this week, the manufacturing figure which was quite poor put the
cat amongst the pigeons again. Alright. Richard, many thanks.
World news, the US has warned that airlines flying into Russia for the Olympics,
that explosives hidden in toothpaste tubes could be smuggled onto planes.
Competitions have already started, but the Winter Olympic Games officially opens
this Friday in Sochi. In Thailand, polling chiefs are trying to work out how to
fix the disrupted election. Blockades by anti-government protesters prevented
some people from voting or candidates from registering. And Japan this week
became the first of Iran's oil buyers to pay for crude under an interim nuclear
deal, that's according to Reuters sources. It comes as the West eases tough
sanctions of course that have crippled the Iranian economy. That is it. Let me
leave you with images of Dennis Aabo Sorenson testing out his bionic hand which
will allow him to feel again after he lost his limb in a fireworks accident 10
years ago. His initial reaction to the device, amazing. He says the feeling is
pretty close to his normal hand. You can find the full piece by one of the
Reuters health correspondents on www.reuters.com. I'm Axel Threlfall, this is
Reuters