08.02.13 Friday Morning

This week will likely be remembered for a time when the UK could lead the bulls as a result of a few FTSE100 heavyweights reporting thundering results.

Monday began with investors adopting a ‘risk-off’ attitude as comments by the UK Chancellor, George Osborne, involving plans to separate banks’ retail and investment banking operations caused investors to shed financial shares. Furthermore, poor construction data from the UK as well as factory orders from the US led to major headline shares finishing the day in the red.

Tuesday began with a bit of a bang as analyst-smashing results from both ARM and BP ignited some confidence in the markets. The fourth-quarter 2012 results were particularly well received given the fact that the UK contracted in the same quarter, which further impressed investors. However, poor results from BG led to early losses of around 2%, but investors shrugged this off in favour of the previously good results.

Midweek markets paused to take a breath as the realisation that the UK corporate earnings season has actually yielded mixed-results and that a few good earnings reports should not dominate the overall picture. In addition, a lack of news flow and economic data led to an unimpressive trading day.

The markets traded cautiously during early trading on Thursday as Day 1 of a key EU economic summit began. Investors were clearly cautious as such summits tend to remind investors that the Eurozone debt crisis is still very much alive. Bearish comments by German finance ministers and ambiguous statements from ECB president, Mario Draghi, regarding the possibilities of QE ending from the ECB added to the sell off on Thursday.

Early on Friday, European markets outperformed the DOW futures as positive data from China, which showed exports jumped more than expected last month, incentivised investors’ confidence. However, such confidence failed to ignite the DOW futures as a result of poor export data from Japan. Thus, it seems European headline shares are perhaps basking in the good news from Asia, but ignoring the bad.

Equity of the week will probably go to Research in Motion which was trading at around half of its present value almost 6-months ago. RIM, or Blackberry as it is will be trading under soon, has jumped around 30% this week alone on the back of Wells Fargo saying better margins from the company’s new phone will offset any potential limited demand. RIM also enjoyed an upgrade from ‘Market Perform’ to ‘Outperform’ and was given around a $20 target range.

Next week investors will receive a wealth of data which could test investors’ appetite for risk. Monday will likely prove quiet owing to a bank holiday in China as well as a drought of corporate data. However, towards the latter periods of the week the markets will enjoy inflation reports from the UK, GDP figures from some Eurozone nations as well as a key G20 meeting next Friday. Investors should also not forget that Manchester United PLC is due to report next week, a day after their first leg clash against Real Madrid.