Article / 26 October 2016 at 7:00 GMT

Morning Markets: Shrinking Apple sours equities

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Watchlist

  • Germany: Gfk Consumer Climate Index (0600 GMT) 
  • US: PMI Services Index (1345 GMT
  • US: New Home Sales (1400 GMT)
European equities are set to open lower on Wednesday in the wake of a weak Asian session and a 2% fall by Apple, the world's biggest company, after it unveiled a third straight quarter of declining y-o-y revenues. Though the earnings report matched analysts expectations (and EPS was surprisingly strong), worries about Apple's prospects of revitalising its flow of tech innovation – and thereby blockbuster sales – dragged on the share.

Elsewhere, we've worrying signs out of Germany this morning where the consumer confidence index was unexpectedly weak, falling to a reading of 9.7 – the first time it has been below 10.0 since June. Might the locals know something the rest of us don't?

Finally today, the saga that is Brexit continues to rumble on, with the latest point of interest being a scoop by The Guardian revealing the thoughts of PM Theresa May prior to the vote back in June. Secret audio of a Goldman Sachs talk shows she feared businesses would quit the country and that she wanted the UK to take a lead in Europe. Which is all very different to the PM's pro-Brexit posturing at home and abroad since coming into office.

Market signals

Asian session

  • Asian shares and US equity futures declined after Apple result
  • Apple fell as much as 2.9% in after-hours US trading
  • Crude oil slipped to a three-week low in early Asia trade
  • ASX 200 was the underperformer in Asia, off 82 points or 1.5% to hit a month low
  • Shares in Ardent Leisure, operator of Queensland's Dreamworld theme park, fell 11.06%
  • Four people were killed at the park when a ride apparently malfunctioned 
  • Australia's headline quarterly CPI grew 0.7%, bringing the annual rate to 1.3% (from 1%)
  • Annual core inflation was unchanged at 1.7%
  • The inflation result is thought to rule out another RBA cut this year

Forex ahead

  • AUD was lifted above 0.77 on higher than expected inflation
  • The yen was basically flat against the dollar, trading at 104.26

From the Floor


Storming aussie. “If AUDUSD closes above 0.7700, that opens up significant upside,” says Van-Petersen

Go on then. “It looks like the market is giving Opec the benefit of the doubt on an oil deal, but without Russia, this is almost a dead deal,” says Hansen.


Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1...2...3
There's every hope that German consumer demand will fall in line with recent buoyant business sentiment data, reports James Picerno 

Gold shines
Gold put in its best performance in more than two weeks, writes the team at Saxo APAC Sales Trading

Supermarket slump
This morning's ASX slump was not helped by overnight US data, but a poor result from supermarket owner Wesfarmers didn't help either, says Saxo Capital Markets 

Winning outcomes
Opinion polls suggest that Hilary Clinton is going to win the US presidency by a wide margin. Michael McKenna outlines the likely impact of such a victory on markets, politics and the wider world. But in the unlikely event of a Trump win, Martin O'Rourke tells us what we can expect....


Apple

 Apple doesn't shine so brightly now. Pic: iStock

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