Market fall as corporate earning remain the focus Whitbred disappoints whilst ARM beats expectations

European markets lost ground in early trading as investors remain cautious with the focus still on corporate earnings and downgrades across five regions of Spain by Moody’s. Whitbred and miners put pressure on the UK index whilst ARM Holdings pushed higher.

A distinct weakness in the markets has been evident this morning as investors take a back seat, with more US earning figures due this afternoon and concerns over the eurozone still lingering, risk off is the approach being adopted. Miners particularly dragged on the FTSE, tracing metal prices lower with Rio Tinto and Anglo American both shedding over 2.4%.

Worries over Spain still continue to plague investors as the positive results in the regional elections on Sunday may mean that Rajoy feels less pressure to request a bailout. However Moody’s has decided to downgrade five Spanish regions to ‘junk’ due to the deterioration in their liquidity and minimal cash reserves. Although the impact of these downgrades have been fairly limited, eyes will certainly been focused on the Spanish government benchmark 10-year bond yield, with any upward spikes likely to affect the equity markets.

Looking at the UK, Whitbred disappointed the market despite revenues for the first half being in excess of £1 billion. It reported an increase in revenue of 14.2% and pre tax profits of £193.4 million, up 10.6%. However the company said that after the boost experienced from the Olympics and Jubilee weekend, second half sales growth is expected to slow going forward. Whitbred lost over 2% by mid morning.

On a positive note shares of ARM gained over 5.1% after the firm reported that it is entering its fourth quarter with a record backlog and a robust opportunity pipeline. It also reported that its third quarter revenues rose 20% whilst profit before tax jumped 22% to £68.1 million, ahead of expectations. This strong performance is thanks to the rising popularity of smartphones and tablet computers.

So far this week there has been a shortage of economic data to distract the market from earnings but from tomorrow we see an increase in activity with a barrage of data out from Europe in the morning and the US Federal Committee Rate Decision tomorrow evening.

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