All Eyes Turned To Apple Earnings

Daily Analysis - 25/10/2016

World’s Largest Public Company Set to Report Fourth Quarter Results


Apple is scheduled to report its fiscal fourth quarter numbers after the close of US trading on Tuesday. The earnings come on the heels of shares of the technology giant gaining nearly 20.00% during the past three months.

Focus Remains Glued to iPhone Sales

After a relatively lukewarm reception of the latest iPhone and weaker company guidance, Apple is set to report earnings after the close of the New York trading cash equity session.  Sales and earnings are projected to decline on a year-on-year basis for the third consecutive quarter in Apple’s fiscal fourth quarter report. The consensus is for net income to come in at $1.65 per share, down 16.00%, while revenue is forecast to stand at $46.9 billion, down 9.00% for the three months ended September 24. Expectations are low as iPhone sales are widely believed to have dipped ahead of the release of iPhone 7 last month.  Considering the device is the single largest component of Apple earnings, it will be important to see how sales figures performed during the period as well as the forward guidance from CEO Tim Cook as the company prepares for the upcoming holiday season.


Crude Heads South After Iraq Warns on Output Cap

Crude oil futures fell in early Asian trade amid the prospect of an OPEC logjam at the group’s next meeting after Iraq indicated it might not take part in the production freeze deal.  Crude futures for December delivery on the New York Mercantile Exchange lost $0.05 to $50.47 a barrel in the Globex electronic session. On London’s ICE Futures exchange, December Brent futures fell $0.13 to $51.33 per barrel.  Iraq, the second largest producer in OPEC, hinted over the weekend that it might withdraw from any deal considering it requires oil revenues to fight the Islamic State.  OPEC members had last month reached a preliminary deal to limit daily output between 32.5 to 33.0 million barrels per day. However, sceptics maintain that even if a deal is ratified during the November 30 OPEC meeting, some members may decide to ignore their output quotas to defend market share.


US Dollar Nears Nine-Month High

The US dollar was holding ground near a nine-month high against a basket of currencies on Tuesday after better than expected US manufacturing figures and hawkish comments from Charles Evans strengthened expectations of a year-end rate hike.  The US Dollar Index, which measures the greenback’s performance against a basket of six major currencies, climbed to its highest since February, sustaining a rally that has already carried the currency 3.60% higher this month.  Preliminary data from Markit released on Monday displayed US manufacturing activity at a one-year high this month. Adding to the bullish market sentiment were comments from Chicago Federal Reserve President Charles Evans, remarking that the Fed could raise rates as many as three times before the end of 2017 provided labour market conditions continued to improve.  In the meantime, the Euro is within striking distance of the seven-month low of $1.0859 set last week.


Weak Korea GDP Drags Asian Equities

Asian markets were trading mostly lower Tuesday after data showed the South Korean economy slowing. Preliminary data from the Central Bank revealed South Korea’s GDP growing by 2.70% year over year through the end of the third quarter compared to a 3.30% increase during the prior three month period.  Business investment dropped, hurt by weak private consumption and falling exports. The KOSPI Composite Index shed 0.80% following the release of the report.  Chinese markets also slipped Tuesday, as gains in resource stocks were offset by a declining Yuan. Monetary authorities in the country set the onshore value of the Yuan against the US dollar at a fresh six-year low of 6.7744, renewing concerns that the currency was on track for sustained depreciation.  Japan’s Nikkei 225 was the lone bright spot, buoyed by robust US manufacturing data that increased the likelihood of a December rate hike.


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