Early Morning Call: UK inflation remains stubbornly above 10% in March

Equity market overview

Equity markets in Europe opened little changed on Wednesday, following the path of US indices yesterday.

In the UK, consumer price index (CPI) remains stubbornly above 10%, at 10.1%, down from 10.4%, but above the 9.8% expected by economists. This maintains the pressure on the Bank of England (BoE) to keep raising interest rates.

Earnings

ASML Holding reported first quarter (Q1) earnings of €1.96 billion on revenues of €6.75bn. Analysts had forecast net profit of €1.62bn on revenue of €6.31bn.

The key supplier to computer chip makers sees net sales in the current quarter between €6.5bn and €7bn, also topping expectations of €6.42bn, adding that total demand still exceeds capacity for his year.

Just Eat Takeaway orders amounted to 227.8 million in the first quarter, missing expectations of 231.1 million. Still, the group raised its 2023 adjusted core profit outlook. Europe's biggest meal delivery company expects adjusted EBITDA of €275 million in 2023. Earlier in January, the group guided for adjusted EBITDA of €225 million. It also announced a €150m share buyback programme.

Netflix beat Wall Street Q1 earnings per share (EPS) estimates by a whisker on Tuesday evening. The streaming video company posted earnings of $2.88 per share, two cents higher than forecast. Revenue came broadly in line at $8.16bn. From January through March, Netflix added 1.75 million streaming subscribers, missing analyst estimates of 2.06 million additions.

For the current quarter, Netflix came up with lower-than-expected numbers. It forecast $8.242bn in revenue and a diluted EPS at $2.86. Analysts expected on average $8.47 billion for revenue and $3.05 for EPS.

Netflix stock initially dropped in extended trading by around 12%, but completely recovered its losses, lifted by an upbeat post-earnings video interview. "We are growing and we are profitable," said co-chief executive Ted Sarandos, adding "We have a clear path to accelerate growth in both revenue and profit, and we're executing it."

Tesla is scheduled to report earnings tonight after UK market close. The street expects earnings of 86 cents per share, and revenue is forecast to rise by 20% compared to the same period last year, to $23.78bn.

Earlier this year CEO, Elon Musk considered it possible for Tesla to produce two million cars this year. But given the current economic environment, demand is really what preoccupies the market. To support demand, Tesla has repeatedly cut its prices since January. Earlier this morning it did so for a sixth time this year. The group cut the price of its model Y long-range and performance by $3,000, and its model 3 RWD by $2,000.

Tesla started cutting prices in China in January, then more recently in Europe, Israel and Singapore, which certainly will raise concerns about its profit margins.

Also after the bell, IBM reports. The street anticipates earnings of $1.27 per share. Revenue is expected to rise marginally to $14.37bn, but below IBM expectations of $14.58bn.

In detail the group is forecast to post a 1.2% rise in software revenue, and a 3.7% revenue rise in its consulting revenue. Infrastructure revenue is expected to slip 1%.

Commodities

On the commodity market, oil prices were little changed on Wednesday morning. US crude oil and fuel inventories fell last week, according to the American Petroleum Institute report published on Tuesday evening. Crude stocks fell by about 2.7 million barrels in the week ended April 14, they said.

Gasoline inventories fell by about a million barrels, while distillate stocks fell by about 1.9 million barrels.