Financial market research and analysis

Traders breathed a sigh of relief as Apple reported strong earnings after the close, putting a spark back into the Nasdaq. The Nasdaq had lost over 4% in 3 straight sessions following disappointing numbers from Facebook and Twitter which had weighed on demand for the broader sectors.

Apple reported a 17% increase in earnings at $53.3 billion for its fiscal third quarter, ahead of expectations. Profits jumped 32% to $11.5 billion. Whilst iPhone unit sales increased by just 1% to 41.3 million, the higher cost of the iPhone X increased the average selling price across the range lifting revenue from the iPhone 20% year on year. Apple’s Services and Wearables also beat expectations whilst forward guidance was also ahead of expectations.

What was there not to like about these numbers? This was the news that the markets had been hoping for; there had been concerns going into this release that the iPhone X numbers just weren’t going to stack up, but that wasn’t the case and Apple has managed to pull it out of the bag again, proving why it should be the first trillion-dollar company. The final 7% lift in the share price required to hit that trillion-dollar level shouldn’t be so tough achieve after a set of figures like that.

 

Trade tensions return

Despite the impressive numbers from Apple, sentiment dropped like a stone as reports that the US is considering increasing its 10% tariffs on $200 billion of Chinese imports, to a 25% tariff. US and European futures, with the exception of the Nasdaq, are pointing to a weaker start to trading on Wednesday.

 

Pound sub $1.31 on manufacturing PMI?

The UK economic calendar starts to pick up as from today after a quiet start to the week. UK Manufacturing will be in focus with the manufacturing PMI expected to show a slight easing in activity in July to 54.2, down from 54. The subdued activity is expected to have continued as the global growth and trade which boosted manufacturing through 2017, is now in question. Concerns are increasing that growing global trade tensions and slowing global growth momentum will continue to drag on manufacturing.

 

No drama expected from FOMC

The FMOC should come and go with little fanfare. Firstly, because history dictates that it’s unusual to see significant tweaks in a meeting which isn’t followed by a press conference and secondly because there have not been any sizeable changes to the economy. Economic activity remains solid and inflation at or near 2%. Whilst they have ramped up, and in some cases, calmed down, trade tensions aren’t expected to suddenly make their way into the statement. Fed Chair Powell was relaxed on the subject of trade wars in the bi-annual testimony before Congress indicating that the Fed does not consider that the current trade tensions warrant a shift in outlook.

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