Steve Clayton, head of equity funds at Hargreaves Lansdown:
“Wall Street enjoyed a strong session last night with all the major indices rising, with NASDAQ setting the pace, up 1.5%. The dollar is weakening in the face of a resurgent Japanese Yen which has rallied to Y153 to the dollar, compared to Y160 earlier this week. Energy markets look calmer, with Brent crude holding steady around $84.
Revenues for Apple were down 4%, but that was still a little stronger than many analysts had predicted. But what the board really could not ignore was the scale of cash balances building up in the business. At the last year end, Apple had reported $38bn of net cash, a figure that analysts were projecting to rise to $63bn by the end of September and to well over $150bn in the next three years. The market greeted the news positively, with Apple stock rising around 8% in post-market trading. That gain means that in practice, by announcing plans to give $110bn to their shareholders, Apple have succeeded in increasing the value of the company by approaching double that amount.
US non-farm payroll data is due to be announced later today, with traders eager to learn what message it will give about the likely path of US interest rates. The forecast is for around a 240,000 increase in payrolls, the weakest since November. That just shows the ongoing strength of the US economy, which despite a large, rapid and sustained rise in interest rates, is continuing to create around a million new jobs every four months. With inflation still stubborn, no surprise that so far, the Fed has felt its hands are tied and that it is too early to start cutting rates.
Intercontinental Hotels Group, owner of brands including Holiday Inn, Crowne Plaza, Indigo, Kimpton and of course, Intercontinental, has released Q1 trading figures. Revenues per available room (RevPAR) are up 2.6% year on year with growth led by the group’s Europe, Middle East, Asia and Africa division, up 8.9%. Rates slipped slightly in the Americas, down 0.3% with Greater China edging ahead by 2.5%. IHG continue to add new hotels to the estate, with 46 hotels in the quarter taking the total number of rooms in the system to 946,000.
Trainline plc, the ticketing app operator announced results for the year ended Feb 29. Ticket values sold rose 22% to £5.3bn, earning the group revenues of £397m. EBITDA rose by 42% to £122m and operating profits doubled to £56m for the year. Almost half of rail tickets are now sold as etickets as rail travel’s digital journey really gets underway. Trainline are growing their presence in Europe and see themselves benefiting from the growth of new train operators entering the market in Italy, France and the UK. No mention though of the Labour Party’s plan to bring all UK rail franchises back under public ownership should they gain power.
Over in the USA, the competition regulator, the Federal Trade Commission, has allowed a $60bn takeover of independent producer Pioneer Natural Resources Co. by Exxon Mobil Corp. But permission for the deal carries an unusual condition; Pioneer’s founder, Scott Sheffield cannot join the combined group’s board. The FTC is alleging that Sheffield tried to collude with OPEC to prop up crude prices. This is the first time anyone can recall a personal condition like this being attached to a deal clearance. As many have pointed out, Mr Sheffield has not been charged with anything, yet is being effectively judged guilty by the regulator. To say that US law firms are looking at this and smelling money is probably an understatement.”
