The tech sector dominated the news overnight. First up, Apple’s stellar results. Shares in the iPhone maker rose after it beat Wall Street estimates, thanks to the expensive iPhone X driving forecast-busting revenues. Now for the bad news. For the first time in seven years, Apple is not among the world’s top two smartphone makers. For the first time ever, a Chinese company is.
Apple’s result aside, the share price tumbles of some other major tech companies are testing some of the world’s best-known hedge funds. Are the Faangs (Facebook, Amazon, Apple, Netflix and Google/Alphabet), one of 2018’s “ conviction trades”, losing their shine? It’s not just the star stockpickers. The stakes are similarly high for passive funds after the Faang sell-off, writes our columnist.
Finally, staying with Facebook, the company said it discovered the first co-ordinated disinformation campaign designed to influence the US midterm elections. But the company stopped short of identifying Russia as being behind the interference.
Brexit News. The EU is willing to “fudge” crucial Brexit negotiations — and offer Britain a vague blueprint for future ties with the bloc. And the sweetened approach from Brussels may be thanks to Angela Merkel, the German chancellor. But can Theresa May now butter up Emmanuel Macron? The UK prime minister is meeting the French president at his summer retreat this week to attempt exactly that. He may be feeling generous after surviving two votes of no confidence.
Growth complex. Concerns over a slowdown in the eurozone are rising after official figures showed that growth in the region hit its weakest rate in two years in the second quarter. Separately, if you’re interested in charts that tell a story, here’s the UK economy since the Brexit vote in 5 charts. The data can be summarised as “soggy, but not disastrous”.
A trade war truce?. The next wave of US tariffs is set to kick in as soon as today, with the possible imposition of duties on another $16bn of Chinese imports. But negotiators from the US and China are reportedly having private talks aimed at re-starting negotiations and averting a full-blown trade war between the world’s two largest economies.
Federal Reserve News. The US Federal Reserve is expected to keep interest rates unchanged today, but solid economic growth combined with rising inflation are likely to leave it on track for another two increases this year. The meeting comes after Donald Trump, in a departure from usual practice in US presidents not commenting on Fed policy, said he was worried that growth would be hit by higher rates. It also follows Japan’s two-day policy meeting, where the Bank of Japan failed to join the global tightening train.
Stocks News In Brief: Cenkos Securities rated new “buy” at Whitman Howard; Acacia Mining raised to “buy” at Panmure Gordon; Templeton Emerging Markets Investment Trust cut to “neutral” at Stifel; Vivendi upgraded to “hold” at Kepler Cheuvreux; Heineken downgraded to “hold” at Jefferies; Valora downgraded to “neutral” at Credit Suisse; Klingelnberg rated new “outperform” at Credit Suisse; MBB rated new “buy” at Commerzbank.
Equities. Equities were mixed in Asia Pacific as benchmarks in Tokyo and Hong Kong bounced back following a rough Tuesday session, although strong revenue from Apple announced overnight boosted the iPhone maker’s suppliers.
Hong Kong‘s Hang Seng index was flat after giving up early gains as an early rally by Tencent pulled back to leave the company up just 0.5 per cent.
In Tokyo the Topix was up 0.8 per cent as the industrials segment gained 0.5 per cent and financials rose 1.2 per cent in the first session following a change to the Bank of Japan’s exchange traded fund purchasing policy which shifted the central bank further away from the jumpy Nikkei 225 index.
Sydney’s S&P/ASX 200 was flat as a drop for financials offset gains by mining stocks while Seoul’s Kospi gained 0.4 per cent.
On Wall Street overnight, technology stocks snapped a three-day run of losses — helped by reports that Washington and Beijing were making efforts to restart trade talks — with the S&P 500 closing up 0.5 per cent.
Apple reported after the closing bell. In pre-market trade, Apple’s shares rose 4.1 per cent.
Forex and fixed income. Foreign exchange markets were calm as the dollar index tracking the greenback against a basket of peers climbed 0.1 per cent to 94.605. The Australian dollar was 0.2 per cent lower at $0.7414.
Yields on 10-year US Treasuries rose 1bp to 2.971 per cent while those on the equivalent Australian notes were up 6bp at 2.702 per cent.
Commodities. Oil prices continued to drop on speculation that US sanctions on Iranian oil exports could be avoided following remarks by President Donald Trump. Brent crude, the international benchmark, was down 0.4 per cent at $73.91 a barrel, while US marker West Texas Intermediate fell 0.5 per cent to $68.39.
Gold was off 0.2 per cent at $1,221.09 per ounce.