Apple beats expectations as iPhone sales rebound and IAG are back in profit

“The FTSE 100 started the day on the front foot despite selling overnight and the pound reaching a one-year high against the dollar,” says AJ Bell investment director Russ Mould.

“Strength in sterling hits the relative value of the overseas earnings which dominate the index. A strong showing from heavyweight stock BP, as investors continue to react to its bumper profit earlier this week, helped it along.

“US stocks were lower overnight and the dollar fell thanks to the continuing crisis in the regional banking sector which is leading to increasing bets the Federal Reserve may have to move from a pause on interest rate hikes to actually cutting rates in order to preserve financial stability.

“Like someone trying to wipe dog mess off a pair of pristine white trainers, Adidas’ efforts to leave the controversy over its association with rapper Ye behind it are only proving partially successful so far.

“On the plus side the company’s quarterly earnings did beat expectations. However, there was no update on what it plans to do with its stock of unsold Yeezy shoes with the ending of this venture resulting in a €400 million hit to revenue in the three-month period.”

Apple

“Consumer electronics giant Apple’s latest results might not have been the home run experienced by some of its rivals, but better-than-expected iPhone sales growth meant its numbers were still a solid hit with investors judging by the after-hours reaction.

“Having been beset by supply chain issues in China, there will be relief at the rebound in sales of handsets. Group-wide sales did slump for a second consecutive month, as sales of Mac computers and iPads suffered, but at least the drop off was not as bad as feared.

“The strong dollar, a trend which has started to unwind, was a big culprit and it was notable that the company guided that excluding currency movements revenue would have grown 3%.

“The pandemic boom in spending on stuff, including the leading consumer tech sold by Apple, has waned significantly.

“This is an undoubted headwind for the company and only increases the importance of boosting its services revenue, encompassing Apple TV, iTunes, the App Store and Apple Pay, from which it can generate substantial margins.

“The danger for Apple, and something which could really take a bite out of its share price, is widespread cancellation of subscriptions accompanied by falling hardware sales.”

International Consolidated Airlines

“British Airways owner International Consolidated Airlines enjoyed a very important milestone by unveiling its first operating profit since the pandemic.

“The company is benefiting in two ways. Easing oil prices have helped with fuel costs while passenger demand has been robust.

“Crucially, and despite the pressures on household budgets, jetting away continues to be prioritised when it comes to spending decisions and bookings are healthy.

“Debt remains very elevated – a consequence of covid – and the return of the dividend next year, which is roughly what has been guided, would be true evidence CEO Luis Gallego has successfully piloted a flight path to recovery.

“There is one fly in the ointment. The rebound in business travel, an important area for the group, remains sluggish and three years on from the start of the pandemic there may be fears this is becoming a structural issue with companies no longer as willing to fund these kinds of trips as regularly.”

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