Yet again this market is proving that geopolitical concerns have only a short-term impact on broader investor sentiment. Last week’s Ukrainian news saw a gap between major earnings, and now that US companies are back in focus the emphasis, and with it risk appetite, has shifted. Netflix has raised its sights, targeting a general expansion of services around the world. If it can add almost 600,000 subscribers in a normally quiet quarter, heaven knows what it can do in a busy one.
Tesco’s rise yesterday has been wiped out by a 3% drop today, as euphoria over a new chief executive fades to be replaced with a sober realisation that any turnaround will be a long-term effort. Royal Mail continues to erode its post-flotation pop, but with the shares seemingly unable to arrest their decline the question will be how long the much-lauded ‘long term investors’ will stay? Especially given the weakness in the supposedly robust parcels unit.
Earnings today will satisfy investor appetite on all fronts, but it will be the tech sector that will receive most of the attention. Having beaten expectations for five quarters in a row, forecasts are high for Apple in Q3, but there is hardly a time when expectations are not high for Apple. With the Dow Jones back above 17,000, the impression is of a market that is in no mood to go lower, and is gearing up for another move higher thanks to a positive set of US earnings. Ahead of the open we expect the Dow to start 28 points higher at 17,079.