Market snapshot: records fall on Wall Street but FTSE 100 misses out

As the earnings season generally goes from strength to strength, the main US indices are riding the wave and touching record highs.

The S&P500 briefly touched the 5,000 level for the first time ever on Thursday, before falling back marginally. Meanwhile, the Dow Jones is also testing new highs, while the Nasdaq is still a couple of percentage points away from a fresh record.

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Alongside increasing optimism following strong earnings, the mega cap technology stocks have for the most part also made their contribution after a stellar 2023, largely driven by euphoria around potential AI applications.

Indeed, the recently floated ARM Holdings ADR (NASDAQ:ARM) closed the session up almost 48% after it reported stronger than expected earnings and, equally importantly, forecast large demand for its chipmaker designs related to AI.

Elsewhere, The Walt Disney Co (NYSE:DIS) rose by almost 12% on earnings which beat estimates, alongside a $3 billion share repurchase programme and a 50% uplift to its dividend.

It is estimated that with over half of the S&P500 now having reported quarterly earnings, some 80% of companies have surpassed expectations, which has given support to the notion that the evident strength of the US economy gives the Federal Reserve little need to move interest rates for now.

This in turn has lifted Treasury yields over recent sessions, but without the usual associated pressure on stocks as earnings continue to please. In the year to date, the main indices have all posted healthy gains, with the Dow Jones ahead by 2.7%, the S&P500 by 4.8% and the Nasdaq by 5.2%.

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In Asian markets, trading was lighter than usual ahead of the Lunar New Year holidays, with the likes of Hong Kong and Singapore finishing early and China and South Korea closed.

In Japan, the Nikkei again tested highs not seen since 1990, encouraged by comments from the Bank of Japan, suggesting that the current easy monetary policy is likely to largely remain in place. In addition, the region has seen an influx of overseas investors who have chosen to flee Chinese markets in light of the country’s ongoing economic woes.

Indeed, the main China index, which has lost almost 30% over the last year, continues to be dogged by bouts of investor scepticism despite attempts by the authorities to imply some stimulative measures. As yet, there have not been any coordinated or concrete measures sufficient to lift sentiment, with the larger questions of consumer sentiment and a beleaguered property sector remaining unanswered.

UK markets were mixed in early trade, after a weaker previous session in which there were some earnings disappointments. AstraZeneca (LSE:AZN) reversed some of yesterday’s losses resulting from a weaker than expected earnings print and despite a subsequent broker downgrade.

Tesco (LSE:TSCO) also rose after announcing the sale of its retail banking business to Barclays (LSE:BARC), in a move seen to add weight to the supermarket’s aim of concentrating more heavily on its core food business. 

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Overall, however, UK markets remain in the doldrums for the time being given a lack of support from global investors, despite the increasingly yawning gap on the main indices and their foreign counterparts on valuation grounds.

In the year to date, the FTSE100 has fallen by 1.7% and the FTSE250 by 2.9%, in sharp contrast to the bouts of optimism being enjoyed in many of the other major global areas.