Early Morning Call: FTSE 100 opens higher but is poised to post a second week of declines

Equity market overview

Equity markets in Europe opened higher after a week of declines. Yesterday, US indices continued to fall, and are now poised to post the worst weekly performance in two months.

In China, service activity grew for a fourth straight month in April. The Caixin/S&P Global services PMI fell to 56.4 in April from 57.8 the month prior. The Caixin/S&P's composite PMI, which includes both manufacturing and services activity, fell to 53.6 from 54.5 in March, also marking a fourth straight month of expansion.

NFPs

After the Federal Reserve (Fed) and European Central Bank (ECB) decisions, the market now awaits US non-farm payrolls (NFP) for April. Economists forecast on average 180,000 job creations. The unemployment rate is seen rising to 3.6%, from 3.5% the previous month, while average hourly earnings should rise by 0.3% month-on-month (MoM), 4.2% year-on-year (YoY), matching last month's pace.

The US dollar trades lower ahead of the job report.

Equities

On the equity markets, IAG lifted its 2023 profit forecasts on strong travel demand. The British Airways owner surprised the market with an adjusted operating profit of €9 million. The market expected a €173Mln loss. IAG now estimates that annual profit will come in above the top end of the €1.8 billion to €2.3Bln given in February.

Air France posted a wider operating loss than expected of €306Mln. Revenue was slightly higher than forecast, driven by strong summer bookings.

Adidas posted better than expected number for the first quarter (Q1). Adidas reported a small operating profit of €60Mln, higher that the €15Mln expected. It posted a net loss from continuing operations of €24Mln. Revenue was also better than expected at €5.27Bln.

Apple shares rose 1.5% in extended trading last night, after the US' largest company by market value beat Wall Street expectations. Earnings came in at $1.52 per share, unchanged compared to the same quarter a year ago, and higher than the $1.43 anticipated by analysts. Revenue fell 2.5% to $94.8Bln. The market had forecast a 4.4% decline to $92.9Bln.

Apple raised its dividend by 1 cent to 24 cents a share. iPhone sales were up 1.5% to $51.3 billion, beating expectations for a 3.3% drop. According to research firm Canalys, global smartphone shipments fell 13% during the first three months of 2023. But not all of Apple products shared the same fate. Mac sales fell more than 30% compared with analyst estimates of a 25% decline. Sales of wearables - devices like AirPods and the Apple Watch - fell about 1% compared with estimates for a 4.4% drop.

Investors are still waiting for the company's next major hardware product. According to Bloomberg, a mixed-reality headset could be unveiled as soon as next month.

Coinbase jumped nearly 11% in after-hours trading. The crypto exchange platform posted a smaller loss of 39 cents per share than expected. Revenue also was better than anticipated at $772Mln. The company lowered operating expenses by 24% from last quarter and reported $607 million in expenses, much lower than its prior range of between $625 million and $675 million. But trading volumes more than halved to $145Mln. Retail trading volumes sank 72%.

Lyft shares sank yesterday evening after the company posted a much wider loss than anticipated - a loss per share of 50 cents, compared to expectations of an 8 cents loss. Revenue came in at $1Bln.

To catch up with its competitor Uber, Lyft had to cut prices. This translated into 10% more riders in the first three months of the year, but it also lead to a drop in margins.

In terms of guidance, Lyft expects revenue of $1Bln and $1.02Bln, below estimates of $1.08 billion. Core earnings should come between $20Mln and $30Mln, way behind the forecast of $49.3Mln.