Financial market research and analysis

Signs that trade war tensions could be thawing lifted Wall Street for a third straight session. Trump reportedly signalled to his negotiators he wants to offer China a deal in time for the G20 meeting - something most had already given up on. Broadly positive earnings throughout the session added to the upbeat mood. However, disappointing numbers from Apple after the bell saw its share price dive 7% in after-hours trading and the US index futures take a step lower.

Apple to hide its product numbers

The tech giant reported revenue at $62.9 billion, slightly ahead of expectations. Increased demand for services such as the iCloud, Apple Music and the App store helped drive the 20% increase in revenue. iPhone sales were flat at 46.9 units sold in Q4. However, the weaker sales forecast for the crucial holiday season, combined with the news that Apple will no longer give a breakdown of product sales has been interpreted as a signal of declining unit sales going forward. CEO Tim Cook and CFO Luca Maestri made attempts to explain the reasons behind no longer giving product breakdown numbers but failed to pull the wool over investor’s eyes. The simple fact is if the numbers are great you want to share them, if you expect the numbers to start looking sticky it is much easier to hide them.

Asian markets took the lead from Wall Street lapping up positive news on easing trade war tensions. Even Apple suppliers in Asia managed to focus on trade news rather than Apple’s disappointing forecast.

The trade war has been partly to blame for the recent equities rout, so any signs that the two powers are making progress will encourage investors to put risk back on the table and pick up stocks at bargain levels. This remains a fragile situation, but it appears to have turned a corner, providing a floor to the recent equity selloff. Whilst talks are on a positive note, we don’t expect to see a repeat of those extreme bouts of selling that we saw across October. European equities are pointing to a flying start on the open, with gains just shy of 1%.

Non-farm payrolls to confirm December rate hike?

The dollar dipped over 0.8% in the previous session, as the safer haven lost its appeal. Improved US – Sino relations saw investors putting risk back on the table. The dollar will remain in focus as traders turn their attention to today’s non-farm payroll figures.

Expectations are for 190,000 jobs to have been created in October, up from 134,000 the previous month. Once again particular attention will be paid to average earnings as traders watch for further clues as to the health of the US economy and whether the figures are supportive of another rate rise in December. Average earnings are expected to increase 0.2%, compared to 0.3% in September. Unemployment is expected to remain steady at 3.7%.

Should the figures impress, the probability of a rate hike in December will increase. The dollar could regain losses from the previous session, targeting Wednesday’s high of 97.20 versus a basket of currencies.

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