A bit of good news seems to have sucked all the optimism out of markets. Fears that a robust jobs market will force the Fed to dig in deeper on its rate hike programme have unsettled investors who have grown weary of the inflation story and are ready to jump on a recovery rocket. But the rocket looks like it might fail to find orbit this time out as headwinds continue to buffet global economies, with the tech sector seemingly worst hit.
AJ Bell said in a note: “Dell has joined a growing list of companies trying to right size their operations after getting caught up in a post-pandemic bubble. It’s become a familiar story and one investors have seemed to like, to a point. Dell’s share price slipped today as the cost-cutting was delivered with a side of outlook gloom.
“Consumers and businesses spent lavishly during covid lockdowns, kitting themselves and their workforce out for a stint of home working. They pulled forward spending that they would normally have spread out over a longer period of time and with budgets tight, it’s a no brainer to postpone further tech spend until inflation is finally kicked to the curb.
“The question investors are wrestling with at the moment is whether Big Tech has cut enough fat to see it through the lean times without jeopardising future advances. After all, innovation is where future money will be made.
“Tyson foods might be wishing it had had a better grip on future trends when it played chicken with meat supplies and lost. The phrase ‘a perfect storm’ is overused, but in this case it’s right on the money. A bird flu outbreak, an unexpected increase in beef production and a shopper with plenty of inflation-busting choices didn’t bring the anticipated dividends Tyson had bet on and that resulted in an earnings miss that’s displeased the market.
“London’s FTSE 100 failed to hang on to Friday’s fizz as yet another day of strike action weighed on UK output. It doesn’t really matter if the UK avoids getting the official recession sticker applied at the end of the week, the road ahead is paved with testy negotiations.”