The Morning Call - Apple shares hit record highs - Collins Sarri Statham Investments

Highlights of the Day

Asian Markets

Asian stocks were mixed in holiday-thinned trading as investors digested uninspiring Chinese economic data, Donald Trump’s pick for next Fed chief and a U.S. tax cut plan.

U.S. Markets

U.S. equity indexes managed to close higher for the session after investors digested a few of the details of the tax-reform plan proposed by Republicans

Today's News

Smith & Nephew said it now expected its full-year revenue and margin performance to be at the lower end of previous guidance, amid a 3% rise in third-quarter revenue. The medical equipment maker’s revenue rose to $1.15b, largely thanks to 9% growth in emerging markets. Growth in established markets was lower, at 1%, with the U.S. up 2%. “We expect underlying revenue growth for the full year to be at the lower end of our guided range of 3-4%,” the company said.

Centrica has acquired REstore NV, Europe’s leading demand response aggregator, for €70m in cash. REstore – which has its headquarters in Antwerp, Belgium – manages 1.7GW of peak load from a portfolio of industrial and commercial (I&C) customers across Belgium, the UK, France and Germany, generating value for businesses through ancillary services including frequency response and capacity markets. The company’s patents are currently used by over 150 of Europe’s largest energy users, including chemical, steel and food manufacturers.

Arqiva Group and Bakkavor Group both said they have decided to shelve plans to float in London. Arqiva, which operates television and radio towers, announced its intention to float in October and had anticipated to raise £1.5bn in its initial public offering. At the time, the Financial Times had suggested that it could have a market value greater than £4.5bn. On Friday, however, it said that it had decided to “postpone” what was set to be the second-largest IPO of the year, the largest being Allied Irish Banks PLC which raised EUR3.00 billion, valuing it at EUR12.00 billion. Arqiva, whose masts carried the BBC’s first broadcast in 1936, said that it had taken the decision as a result of “uncertainty” in the IPO market. This, it argued, meant that pursuing a listing at this time was “not in the interests of the company and its stakeholders”.

TP ICAP said revenue in the third quarter was up, but warned of a “challenging” outlook in the fourth quarter, and also said Chief Financial Officer Andrew Baddeley will step down from the board with immediate effect. Pro forma revenue in the third quarter of 2017 was up 3% year-on-year to £420m from £406m, while revenue for the nine months to the end of September was up 9% to £1.35bn from £1.23bn a year earlier. Revenue grew modestly in the third quarter despite “mixed market conditions”, marked by ongoing low levels of volatility.

China’s private sector expanded at the slowest pace in more than a year in October driven by a further slowdown in manufacturing, survey data from IHS Markit showed. The Caixin composite output index fell to 51.0 in October from 51.4 in September. This was the lowest score since June 2016. Nonetheless, a reading above 50 indicates expansion. Growth in Chinese services activity picked up from September’s 21-month low. The services Purchasing Managers’ Index rose to 51.2 from 50.6 in September. The Caixin PMIs for October showed that the economy had a relatively weak start to the fourth quarter, Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said. However, monetary policy is unlikely to be loosened unless major downside risks emerge.

Apple’s iPhone sales were up in the company’s fourth quarter to 46.7 million units, the company said Thursday, as it posted record revenue and a quarterly profit that was about 19% above results for the same period last year. Apple said the iPhones it sold included the latest models, the iPhone 8 and 8 Plus, which came out in September. iPhone sales were 2.5% higher than in the same quarter last year. The tech giant reported revenue of £52.6bn, an increase of 12% from the year-earlier period. “We’re happy to report a very strong finish to a great fiscal 2017, with record fourth quarter revenue, year-over-year growth for all our product categories, and our best quarter ever for Services,” Tim Cook, Apple’s chief executive officer, said in a statement.

Gold traded in a narrow range on, below the previous session’s high, as the dollar steadied amid caution ahead of U.S. jobs data later in the day.

Oil Prices rose, supported by OPEC-led supply cuts which are tightening the market as well as by strong demand, but analysts cautioned that the cuts would need to be extended to counter rising U.S. output.

Companies Reporting this week

Day	Companies
Today:	Smith and Nephew

Early Market Movements

Market	Index	Change	% Change
UK 100	7,574.4	+19.1	+0.3%
UK 250	20,422.4	+36.9	+0.2%
GER 30	13,472.6	+31.7	+0.2%
FRA 40	5,510.5	-0.0	-0.0%
U.S. 30	23,516.26	+81.25	+0.4%
U.S. 500	2,579.9	+0.5	+0.0%
OIL (BRENT)	60.72	+0.10	+0.2%
GOLD	1,275.51	-0.62	-0.1%

UK Risers & Fallers (8:15am)

Company	Price	Change	% Change
International Consolidated Airlines Group	641.5	+10.5	+1.7%
Fresnillo	1326	+19	+1.5%
Keller Group	972.25	+24.75	+2.6%
Smith & Nephew	1367	-16	-1.2%
Lloyds	67.54	-0.4	-0.6%
TP ICAP	488.95	-46.1	-8.6%

Latest Broker Views

Company	Broker	Recommendation	Price	Target
Glencore	JPMorgan	Neutral	381.7	320
BT Group	Citigroup	Neutral	253.35	275
Standard Chartered	Credit Suisse	Underperform	730.8	610
Tate & Lyle	Citigroup	Neutral	690	720

Forthcoming Economic Data

Time/Date	Previous	Forecast	Outcome
10:30am: U.K. Services PMI	53.6	53.3	–
1:30pm: U.S. Average Hourly Earnings m/m	0.5%	0.2%	–
1:30pm: U.S. Non-Farm Employment Change	-33k	312k	–
1:30pm: U.S. Unemployment Rate	4.2%	4.2%	–
3:00pm: U.S. ISM Non-Manufacturing PMI	59.8	58.5	–