Apple buyback helps stabilise EU stocks in quiet session

European stocks fell small on Monday in a slow start to the new trading week but indices bounced from close to their daily lows after Apple announced a share buyback and dividend. Strength in mining stocks helped to keep the FTSE 100 afloat in trading with financial stocks being the key drag, ahead of the budget speech on Wednesday.

It’s been a fairly slow start to trading for the new week, with a lack of significant economic data or news flow helping to trigger investors into action. As such we have seen investors simply trading through the motions for much of the day, until the Apple news helped to light up the session somewhat in afternoon trading. In truth however, there is perhaps not much to read into today’s session, with a lack of affirmative action from investors.

Apple announced that it will start paying a quarterly dividend of $2.65 a share in July and will also buy back $10billion worth of stock at the start of the next financial year – spread out for three years. This is the first dividend paid out by Apple since the turn of the millennium and will delight shareholders that some of the huge amounts of cash generated by the world’s most valuable technology company is now being returned to shareholders, though much remains in reserves for strategic acquisitions.

The FTSE 100 has thus far struggled to trade above the 6000 level, and this is leaving some doubt in investor’s minds about their next move. I get the feeling that many investors are waiting to either react to more positive economic data or for the longstanding question of ‘will the FTSE 100 break through the 6000 level?’ to be answered, before making their next move.

A lack of profit taking is a welcome sign but upside momentum over the past month has warned somewhat as traders gaze at the 6000 level. Fear of missing out on any rally continuation is helping to minimise losses in UK stocks but a lack of follow through sooner rather than later can change risk appetite quickly.

The FTSE 350 banking sector has been a key drag on the UK Index, falling 0.7% despite shares of Royal Bank of Scotland (RBS) bucking the bearish trend today, to be the top FTSE 100 gaining stock.

The miners helped in part to prevent a broader sell off in the FTSE, with the FTSE 350 mining sector gaining 0.4% thanks to rising commodity prices and the weaker US Dollar.

Activity is expected to pick up as the week progresses with UK inflationary data out tomorrow, whilst the BoE’s MPC minutes and the budget speech, due out Wednesday could see some interesting moves in individual equities.

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