European markets recover ARM holding rallies

European indices are seen to be recouping some of the losses they experienced in the sharp sell off yesterday. The FTSE suffered its biggest one-day fall in over three months yesterday, loosing over 100 points or 1.6% whilst the Spanish IBEX shed 3.8% and the Italian FTSE Mib was down by over 4.5%, as increased political uncertainty in peripheral Europe sparked profit taking on a large scale.

Early trading this morning appears to be calmer in nature with the FTSE up 0.4% the CAC up 0.4% and the DAX trading flat as investors turn their attention to digesting the release of  some heavyweight corporate earnings.

ARM holdings are currently at an all time high after reporting a 16% rise in profit before tax for the fourth quarter, boosted by high demand for the company’s processor technology for smartphones and tablets. Revenues also came in up 19% year-on-year beating forecasts and offering further support to the share price which has almost doubled since September 2012.

BP reported a slip in fourth quarter profits due to lower upstream production, however, has stated that they believe they are now well positioned for growth after passing many milestones in 2012. Underlying replacement cost profit totaled $4 billion in the last three months of 2012 down from $5 billion a year earlier that said the market was pleased with the results and BP increased it share value by over 1.3% in early trading.

On the downside BG lost over 2.1% after posting a 29% fall in fourth quarter earnings on the back of a decline in cargo deliveries. The natural gas firm reported earnings of $1 billion in the last quarter of 2012, down from $1.4 billion the previous year and also warned it will miss production targets in 2015.

Looking towards economic data, private sector activity across the Eurozone continued to shrink in January but at the slowest rate for over 10 months. However, the data did highlight increasing differences between countries within the Eurozone. Germany showed expansion with the strongest data for over 19 months whilst Spain, Italy and France all saw sharper contractions.

European retail sales also disappointed showing a year on year contraction of 0.8% when a contraction of only 0.1% was expected. However, the data had little impact on the market. Looking towards the afternoon US Non – Manufacturing Composite will be the focus along with continued corporate earnings.