Yesterday’s price action was but a prelude to the big earnings from Apple and Facebook, and they have provided the much-needed reassurance that investors in tech stocks will have wanted. Sentiment in London has been given a boost from the news, lifting the market to its highest levels in over six weeks.
Following on from the pharma merger activity earlier in the week, AstraZeneca results have given the sector yet another boost while pushing Astra’s share price firmly above the all-time high of £41 seen in February. Unilever’s quarterly results signalled a good start to 2014, but now tech is back in vogue the stalwart defensive stocks are finding themselves out of favour once again, with Unilever shedding some of its recent gains.
Last night’s figures from the tech sector will have encouraged investors that had begun to flee the sector in the momentum panic of several weeks ago. Apple continues its transformation from a company that revolutionises the world to one that just keeps throwing out cash, and while rising iPhone sales stole the headlines, the widening of margins will be of more interest in the longer term.
Mark Zuckerberg can afford to buy himself another hoody after Facebook’s results, with advertising revenue doing exactly as hoped and rising year-on-year. Growth in mobile is now the company’s big hope, and it needs to deliver on that in the quarters to come.
Ahead of the open, we expect the Dow Jones to start 53 points higher at 16,554.