A number of big technology companies are reporting results in the US this week as the earnings season kicks off in earnest. It coincides with growing turmoil on stock markets, especially in emerging market economies, but also in bigger economies like the US and China.
Aidan Donnelly, senior equity analyst with Davy, said a confluence of factors was contributing to the upset on markets in the US, including disappointing economic data out of China. "On the earnings front, companies are running a little bit behind where we'd normally see them at this time. However, the number of companies missing earnings is also running behind. It's a lack of good news as opposed to any bad news," he stated.
Peter Brown, the founder of the Institute of Financial Trading, said the effect of tapering in the US was also being felt, just as an announcement on its extension by the US Federal reserve was expected. "All printed money has found its way into stock markets, especially in emerging markets. They're starting to withdraw from there. Argentina is in a terrible state," he said. "The Chinese banking system is also making markets nervous. It's hard to get hard info out of China and that's adding to the problems."
Mr Brown pointed out that markets rose by 30% in the last year and said if there was a correction of 5 to 10%, that would be healthy. However, he cautioned that the world economic situation was in a delicate place and that a sustained downturn could hurt growth. "Since 2007, central bankers have been running the planet. We now have the situation of when they speak, everyone takes notice," he concluded.
MORNING BRIEFS - Japan has posted a record annual trade deficit for the third year in a row. The figures are particularly disappointing given that the Japanese government has deployed an aggressive policy of currency devaluation to boost exports. That in itself appears to be working as exports were up over 15% in December alone, but the problem is that a weaker yen also drives up the cost of imports. Japan has been importing large amounts of fuel since the Fukishima nuclear disaster a few years ago. That saw the trade deficit increase to 1.3 trillion yen or just over €9 billion.
*** The invoice finance company Bibby financial services is establishing a €60m fund for SMEs in Ireland. The fund is aimed at viable Irish SMEs that need to generate cash flow to sustain or grow their businesses and have given up on their banks. It promises decisions within five days.
*** Google has bought an artificial intelligence company - its biggest European acquisition so far. It acquired DeepMind for a reported $400m. The company, which specialises in algorithms and machine learning for e-commerce, was founded by a neuroscientist and former chess prodigy.