- Equities shrug off FOMC, dollar gets a mild lift
- FOMC more confident on inflation trajectory
- Four-hike outlook is good for bank stocks
- Qualcomm's ugly guidance may bode ill for Apple
- Oil rally losing momentum as US production surges
- Gold settling into a range following the post-FOMC recovery yesterday
By Clare MacCarthy
The corporate earnings season has now swung into top gear with the focus firmly on the tech sector, which has already delivered more than one surprise: Microsoft shares are down 2% and Facebook has dropped 5% despite expectation beats by both. Qualcomm's ugly guidance means Apple's results (tonight) will be very closely watched.
Although chipmaker Qualcomm's results beat estimates, weaker mobile phone sales in China weighed on its outlook so any hint of that same trend in tonight's Apple report would pressure the world's biggest tech company. "Apple has already got a few analyst downgrades so watch this one closely," says Peter Garnry, Saxo's head of equity strategy.
APPL share price. Source: Bloomberg
Meanwhile, the Fed's Janet Yellen chaired her final FOMC session last night and besides a marginal upgrade to the inflation expectation, there were no surprises. "The Fed seems more confident on the inflation trajectory and this was interpreted by market watchers as meaning four rate hikes in 2018. And if we do get four then US banks would obviously benefit from this," Garnry says.
For FX, the FOMC meeting provided a mild lift for the dollar, says John Hardy, Saxo's head of forex strategy, but otherwise there was "no drama". Elsewhere, sterling is firm despite Theresa May's Brexit problems and markets seem to be getting bored with her inability to make any headway in the process to detach her country from the European Union.
Finally today, the crude oil rally is losing momentum as US production has hit 10m b/d, reports Ole Hansen, Saxo's head of commodity strategy. WTI peaked last week at $66.66 after recovering half of the 2014-16 selloff. Monthly EIA data yesterday showed that production exceeded 10m b/d in November for the first time since 1970.