Optimism is in short supply in London this morning, as investors labour through disappointing figures from key names, while keeping an anxious eye on the Fed meeting this evening. RBS’s ability to surprise investors with fresh bad news has been one of the hardy perennials of the past six years, and yet still the news keeps coming.
George Osborne’s decision to sell a chunk of the government’s stake last August, which was derided at the time, now looks like a sound financial decision, but it does mean any further sales are essentially off the table. Coincidentally, with Lloyds down 2% this morning in sympathy, it seems the government will remain a key asset manager when it comes to UK banks.
Also on the slide today was Antofagasta, which missed production targets for the past year. The usual protestations about increased cost-cutting have not gone down well with investors, who continue to watch as miners dig themselves into deeper holes without any sign the current dire situation is about to change.
Apple’s earnings last night failed to excite, with warnings about slowing iPhone sales reminding markets that, for all its innovations, the firm is still essentially dependant on its iconic smartphone for its daily bread. If this falters, no amount of modest growth in iPad or Watch sales will help.
All eyes turn to the Fed meeting this evening, as the divergence between the Fed’s and the market’s view of interest rates gets wider. Ahead of the open, we expect the Dow to start at 16,049, down 118 points from Tuesday’s close.