Financial market research and analysis

The S&P and the Dow gapped lower on the open for the first time in 7 sessions as traders showed more concern than relief over the extension of the trade tariff reprieve for an additional month. This has been interpreted as yet another uncertainty which continues to loom over the markets rather than being any form of good news.

Losses were clawed back throughout the session with the Nasdaq and the S&P closing in positive territory, lifted by a rally in tech stocks. However, overall, there was a distinct lack of enthusiasm, as investors remain troubled over the direction of the US – EU relationship in light of the trade tariffs, concerned over the Iranian nuclear deal and concerned over todays risk event – the Federal Reserve meeting and whether it will pull to the surface underlying concerns over future interest rate expectations.

Apple Reassures

After the bell Apple reassured the markets that demand for the iPhone was still alive and kicking even a decade after its first release. Apple reported resilient iPhone sales in the face of waning demand and $100 billion share buyback. Results beat Wall Street expectations, which had actually dropped ahead of the results given the increasing concern over iPhone sales. Apple’s outlook for the current quarter was also more optimistic than analysts’ driving shares up 3.6% in the after-hours trading.

Suppliers across the globe had warned over demand weakness for smartphones which played into ongoing concerns over Apple reliance on the iPhone. Yet sales of 52.2 million iPhones, up from 50.7 million and just below expectations of 52.3 million has put those fears to bed, at least for the time being.

Whilst the $100 billion share buyback and hike in dividend to 16% are certainly crowd pleasers, this is not driving future growth and the lack of enthusiasm for strategic investment is slightly concerning.

FTSE pointing higher ahead of busy session
After Asian equities eased on Wednesday, the FTSE is set to follow the broader US market higher. With oil trading above $75 per barrel, Sainsbury’s reporting, UK construction pmi and Eurozone GDP data all before the Federal Reserve rate decision this afternoon, there is plenty for traders to focus on.

UK Construction pmi

After a dismal manufacturing pmi, investors are hoping for something more optimistic from the construction sector. March saw activity in the construction sector drop sharply lower into contraction territory. The expectation is for construction sector to have rebounded. Should this rebound not materialise, the pound could find itself sub $1.36 once again. House building stocks would also be expected to take a hit.

FOMC in focus

The dollar is trading close to 4-month highs ahead of the Fed rate decision. No hike is expected, given the increase last month, but we expect the Fed to start lifting expectations for hikes across the year with June set as the next target as inflation continues to tick higher and unemployment lower. The dollar index is just off slightly in early trade at 92.38 after rising to 92.5 overnight, it highest level since January.

EUR/USD at $1.20 Ahead of EZ GDP

The stronger dollar and weaker euro saw EUR/USD dive 0.75% on Tuesday, it is now holding steady around $1.20 with the both the eurozone GDP and the Fed rate decision to contend with. Eurozone GDP is forecast to have ticked lower to 2.5% from 2.7%. Fears over slowing momentum in the eurozone economy have been weighing on the euro over recent weeks, so a surprise to the downside could see the euro tumble lower. Slowing growth at around 2.5% seems slightly ironic, given that it is faster than US growth, and let’s not talk about the UK’s 1.4%. However, strong growth was one of the principal factors that drove the euro higher and if that eases, then so will the euro.