Must read: FTSE 100, IAG, Twitter

NatWest has slumped to the bottom of the FTSE 100 this morning after disappointing quarterly earnings amid the deteriorating economic outlook, while most stocks are trading in the red, writes Victoria Scholar.

GLOBAL MARKETS

The FTSE 100 has opened lower, while continental Europe is trading mixed after the ECB hiked rates on Thursday as expected. NatWest Group (LSE:NWG) has slumped to the bottom of the FTSE 100 this morning after disappointing quarterly earnings amid the deteriorating economic outlook, while most stocks are trading in the red.

In Asia, markets snapped a three-day winning streak with the Hang Seng fell sharply to its lowest level since 2009. Meanwhile, in Japan, the Bank of Japan stuck to its ultra-loose monetary policy with no change on interest rates.

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Gold has been staging gains this week, up by more than 6%, buoyed by a weakening US dollar and concerns about an economic slowdown. Later today, the Federal Reserve’s preferred measure of inflation, PCE prices for September are released, which are likely to see inflation rise after the data accelerated more than expected last month.

Tech earnings continue to take centre stage with disappointing results from Amazon.com Inc (NASDAQ:AMZN) last night, while Apple Inc (NASDAQ:AAPL) managed to beat expectations but warned of headwinds from a stronger dollar. Focus stateside now shifts to the oil giants Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) later today.

IAG 

International Consolidated Airlines Group SA (LSE:IAG) reported third-quarter revenue growth of 21.9% versus 6.4% in the second quarter. It reported nine-month operating profit of 770 million euros swinging from a loss in the same period last year. British Airways’ parent company forecast the full-year result to hit 1.1 billion euros including 0.4 billion euros in the final quarter of the year. However, it warned about uncertainties in the economic outlook and pressures on households.

After the disastrous impact of the pandemic, 2022 was meant to be the comeback year for airlines with the resumption of international travel and the release of pent-up demand. While demand has certainly rebounded, particularly for leisure trips, IAG is still facing pressures from the squeezed consumer, the ongoing lull in business travel with Zoom meetings the new normal, the chaos at airports over the summer with passenger restrictions at Heathrow still in place, and many routes in Asia still closed because of Covid. On top of that the war in Ukraine and the inflationary consequences with rising energy, wage and food costs are adding to these pressures. As a result, IAG shares haven’t enjoyed the rebound they hoped for this year, trading down around 25% since the start of January.

TWITTER

Elon Musk tweeted overnight ‘the bird is freed’ and changed his Twitter Inc (NYSE:TWTR) biography to ‘Chief Twit’.

On Thursday, he took over the social media site following an elongated process full of twist and turns in true unpredictable Elon Musk style. Musk has already sacked CEO Parag Agrawal and CFO Ned Segal, who he had been in a dispute with over the deal. He also wants to slim down its 7,500 workforce, leaving employees, many of whom are already uncomfortable about the deal, now also feeling unsafe in their seats. Musk’s leadership is likely to bring about a strategic U-turn for Twitter, switching the company’s focus from tackling trolls, fake news and conspiracy spreading as well as encouraging healthy content sharing, towards Musk’s free speech above everything mentality instead. Donald Trump, for example, who was banned for violating Twitter rules, could be invited back on to the platform.

Shares in Twitter have outperformed this year, buoyed by the takeover saga, but they may not be tradable on the public markets for much longer if Musk delivers on his desire to take Twitter private. He has long had an issue with the regulatory hurdles and periodic announcements required of a public company and its leadership. As Tesla’s CEO he once tweeted about taking the automaker private without following regulatory protocol, much to the dismay of the SEC.