IBM misses out on world shares lift

A positive start to the first-quarter earnings season and a softening pound triggered by weak inflation data helped to lift the Ffte-100 index and other European indices, as concerns ease over a US-Russia stand-off over Syria. 

But doubts about IBM’s turnaround weighed on US technology shares.

British inflation cooled unexpectedly to a one-year low in March, raising doubts over whether the Bank of England would raise interest rates in May, sending the pound lower against the euro, to 87.17 pence.

In recent days, a resurgent pound had recently reduced the boost enjoyed by international companies which dominate the Ftse index. Shares in Russian gold and silver producer Polymetal, which had been hit by worries over the US sanctions, rose 7.5% after reporting a 19% jump in first-quarter revenue.

“If Mr Trump can score a win on North Korea, and get the Chinese to the negotiating table on tariffs, there will be further good news,” said IG’s Chris Beauchamp.

In the US, the S&P 500 Index gained, but technology shares were under pressure as IBM tumbled after posting weak results. IBM had released its first-quarter results on Tuesday evening, showing narrower profit margins and no revenue growth unless one factors in help from a weak dollar.

The report cast a shadow over an effort to sell more-profitable cloud-based software to revive growth after five years of revenue declines. Though heading in the right direction, the rebirth of IBM has yet to materialise, Daniel Ives, an analyst with GBH Insights, said. “Patience is wearing thin on the Street around the IBM turnaround story, which continues to be elusive,” he said.

First-quarter revenue came in at $19.1bn (€15.4bn), beating the average analyst estimate of $18.8bn. That’s 5% higher than a year earlier, but flat without currency fluctuations. Margins slipped 0.6 percentage points to 43.2%.

Earlier this year, chief financial officer James Kavanaugh said margins would stabilise “immediately” in the first quarter.

Crude oil clung to gains as the US government reported across-the-board declines in domestic stockpiles of oil, gasoline, diesel and jet fuel.

The US draw-downs of stockpiles underlined optimism that an Opec-led effort to curb global supplies will be reinforced later this week when the cartel and allied producers gather in Saudi Arabia.

“We continue to see extremely strong compliance” by Opec nations to self-imposed supply limits, said Nick Holmes, an analyst at Tortoise in Kansas. Brent for June settlement climbed $1.52 to $73.10 in London.

Reuters, Bloomberg, and Irish Examiner staff

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