Tuesday preview: Brexit bill votes, Apple

updated: 28 January 2019 at 3:14pm Author: Alexander Bueso

(Sharecast News) - Investors will be asked to show patience on Tuesday as they wait on the results of MPs' votes on amendments to the Prime Minister's withdrawal proposal.
In particular, traders are focused on two bills, according to Samuel Tombs at Pantheon Macroeconomics, which appear to have the greatest chance of success.

The first of those would require the PM to go for an extension of Article 50 if Parliament has not approved her so-called 'Plan B' by 26 February.

Another, more controversial amendment, would allow groups of as few as 10 lawmakers to table motions on Brexit on 5 February, as long as members from all four parties are included in their ranks.

That, Tombs said, would also allow MPs to force the government to extend talks.

Soon after the first vote results start coming in, quarterly results are due from an avalanche of US technology heavyweights, including Apple, Biogen, E-Bay and KLA Tencor.

For Apple, UBS has penciled-in fiscal year 2019 first quarter revenues of $83.8bn for earnings per share of $4.14.

On the Street meanwhile, the analyst consensus was for iPhone revenues of $52.9bn and unit sales of 68.0m.

But in any case, the spotlight was to be on the company's gross margins in its services segment, which the Swiss broker pegged at in the low-60s.

Looking out to the company's March quarter, UBS had penciled-in revenues and EPS of $56.2bn and $2.43, respectively, which was about 5% below consensus.

Little is expected on the economic front, aside from the US S&P Case Shiller home price index for November at 1400 GMT, followed by the US Conference Board's consumer confidence gauge for January at 1500 GMT.

On the UK corporate side of things, Domino's Pizza and Royal Mail are among the companies that are due to update markets.

Excluding store splits, Numis's Richard Stuber was forecasting 4.0% growth in the former's full-year 2018 fiscal year sales, implying an increase of about 2.0% for the fourth quarter.

On a cumulative two-year basis it would equate to growth of 8.1%, making for a "very respectable result in our view", Stuber said.

For the company's bottom line, the Numis forecast was for profits before tax of £97.7m (consensus: £96.4m).

The same analyst also highlighted how the shares were now trading at a roughly 40% discount to those of its peers and at a record low premium versus the wider market (FTSE 350) of only 15%, instead of 200% before.

Indeed, even Numis's target price implied a zero valuation for the company's international business and a 20% reduction in earnings for its core UK business, which was worse than its worst scenarios, Stuber said.

Regarding Royal Mail, UBS's Dominic Edridge was anticipating few changes versus the first half of the financial year, with UK parcel volume up by 7%, UK letter volumes down by 7% and revenues declining by 5%.

"Given strong e-commerce growth over Christmas, the key question is whether costs and productivity developed in line with guidance," said Edridge.

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