London shares fell on Wednesday as Apple (NASDAQ:AAPL) gave markets a shock and Royal Bank of Scotland (LON:RBS) warned of more provisions.
The FTSE 100 Index dropped 23.67 points to 5887 after the tech giant said it was facing its slowest growth in iPhone sales since the product's launch and its first potential sales fall in the March quarter.
Apple's share price bounced about, eventually closing up US$0.55 at US$99.99.
Manoj Ladwa, partner at broker TJM Partners, said: "Apple’s results have investors concerned as the stock may have finally reached a turning point regarding sales."
Royal Bank of Scotland (LON:RBS) shed 8.8p to 252.1p after setting aside another £2bn linked to the payment protection insurance (PPI) scandal and US sub-prime lending legal claims.
Russ Mould, investment director at AJ Bell, said: "A messy and disappointing trading statement from RBS gets the banking sector’s reporting season off to a bad start.
"Unfortunately this could negatively affect broader sentiment given the sector’s importance to UK market earnings and dividend growth forecasts for 2016."
Markets were predicting that the US Federal Reserve will keep the cost of borrowing on hold when it announces its interest rate decision later.
TJM's Ladwa added: "Although not much is expected from the Federal Reserve this evening, given recent volatility, traders will be expecting dovish comments from chair Janet Yellen.
"Any hint of interest rate rises in 2016 could upset short-term sentiment further."
Back in London, mortgage approvals for house purchase by the main high street banks fell to 43,975 in December from 44,533 in November, below the consensus of 45,500, according to the British Bankers Association.
In equities, broker London Capital Group (LON:LCG) slumped 15% to 6.25p after forecasting a big loss for 2015 and saying it was considering increasing its regulatory capital to boost growth.
Premier African Minerals (LON:PREM) rose 3.6% to 0.39p on news that it had identified significantly higher amounts of ore at its RHA project in Zimbabwe.
MInds & Machines (LON:MMX) climbed 1.8% to 7.12p as the internet domain group outlined plans to expand into China, where it is now working with registry services company ZDNS.
MARKET PREVIEW
London’s blue chips are set for a modest early open despite strong gains for markets in the US and Asia overnight.
Spread bet firms see FTSE 100 adding around between ten and 20 points when trading gets underway, but that is way behind the rises seen overseas.
US events will dominate the day. Apple pulled out some lacklustre sales numbers late last night while the conclusion of the first US Federal Reserve meeting is also due.
Prior to Apple’s update the mood on Wall Street had been good, with the Dow Jones Industrial Average adding 282 points to 16,167 and good gains for both the S&P 500 and Nasdaq.
To give more food for thought to the Fed, Apple blamed a strong dollar for the 2% rises in like-for-like sales over the last quarter.
Revenues were US$76bn, with the iPhone accounting for US$51.9bn of that. Worryingly for Apple fans iPhone sales grew by 0.4%, while the outlook for the second quarter suggested sales will drop by up to 13% compared to the same period in 2015.
Other Apple products also struggled and Tim Cook, chief executive, said currencies cost it US$5bn.
Asian markets made gains. Tokyo had jumped more than 2.7% near the close, Hong Kong was 1.5% higher though Shanghai was flat.
Not much UK company news is scheduled. Hungary-based low-cost airline Wizz Air Holdings reports interims.
On Monday, Barclays issued a report reiterating an overweight rating on shares.
Earlier this month, chief executive Jozsef Varadi told Reuters earlier this month that the air carrier “expects to replace Ryanair” as Europe’s leading low-cost airline.
It has a fleet of sixty planes now, so investors will be interested to see hear how the group intends to scale up and achieve this.