Tuesday, June 23, 2020

Asia Times: Apple’s stock makes new record high after announcing plans to use in-house processors for its Mac computers

Tags
  • Dollar
  • Gold
  • Euro
  • Stocks
  • Oil
  • Reserve Bank of New Zealand

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Market Recap: Apple’s stock makes new record high after announcing plans to use in-house processors for its Mac computers

Worries for a second wave of Covid-19 infections continue to influence investors position in the financial markets as tech stocks leads gains among S&P500 sectors. A number of states in the south and southwest of the US continued to report spikes in Covid-19 cases on Monday to weigh on investors' sentiment as the likelihood of a renewal of lockdown restrictions increases. Despite this, the S&P500 and DJIA managed to edge out some gains on Monday, likely as hopes for more fiscal stimulus from the US government outweighed the news of increasing Covid-19 infections after US President Donald Trump said that he would support a second financial aid for Americans in light of the virus.

In sector news, technology and utilities led gains among S&P500 sectors while financials fell the most. The gains in tech were likely thanks to a continued shift towards the sector as investors hedge some risk against the potential impact of a second wave of the virus. The financial sector was likely impacted by a dip in existing home sales in the US, signalling that the number of housing loans in the US are likely to be impacted in the short-to-medium-term. Existing home sales unexpectedly declined in May, falling 9.7% MoM instead of the 5.6% drop that economists expected.

In company news, Apple’s stock rose 2.62% on Monday after the company announced its plans to fit its Mac computers with using Apple-designed chips by the end of the year. The departure from using Intel chips in its Mac line of computers as well as several other software enhancements to its products at an Apple event on Monday likely helped pushed its stock to a new record high.

Indexes Daily Change (%) Net Change Closing Price
Dow +0.59% +153.50 26,024.96
S&P500 +0.65% +20.12 3,117.86
Nasdaq +1.11% +110.35 10,056.48
*Source: Bloomberg

In the foreign exchange market, the dollar fell against most other major currencies on Monday, signalling the growing risk appetite among investors in financial markets. The New Zealand and Australian dollar strengthened the most against the dollar among major currencies, signalling that speculation for a global economic recovery returned on Monday.

The Reserve Bank of New Zealand (RBNZ) is likely to keep monetary policy on hold tomorrow at 10am (GMT +8), but may skew its statements to sound more dovish to help limit the kiwi from strengthening against other currencies. As the New Zealand economy continues to recover as it remains effective in curbing the spread of the Covid-19 pandemic in the country, the central bank is more likely to keep monetary policy on hold as an insurance against a potential second wave of infections as a number of other countries are experiencing now. Tightening of its monetary policy at the current juncture of recovery in its domestic economy and expected pressure on the global economy is hence unlikely. But with the New Zealand dollar strengthening 9.02% against the dollar quarter-to-date, the RBNZ is likely to be cautious on an overly optimistic statement which would potentially lift the kiwi and consequently put more downward pressure on its exports. The New Zealand dollar as a result is likely to have some upside on the announcement of the decision, but it will likely face downward pressure during RBNZ Governor Adrian Orr's press conference following the decision.

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Mixed investor sentiment was likely present in the safe haven asset space on Monday. Gold gained for the second day in a row, likely as the precious metal remains in demand as a hedge against a potentially overheated stock market. The Japanese yen and US treasuries fell however, probably as a result of the general shift towards riskier assets. Benchmark 10-year yields advanced 1.5bps to 0.71% as a result.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.61% +10.56 1,754.43
Silver +0.50% +0.09 17.71
USD/JPY +0.04% +0.04 106.91
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year +0.6bps 0.19%
10-Year +1.5bps 0.71%
30-Year +0.6bps 1.46%
*Source: Bloomberg

Oil futures gained on Monday to its highest level in more than three months thanks to optimism on both falling crude oil supply and recovering global demand. Unofficial reports that Nigeria has submitted plans for its compensatory production cuts in the upcoming months as part of its fulfilment of the latest OPEC+ agreement likely helped put upward pressure on oil prices as traders welcomed more signals of increased compliance among oil producers in the coalition. A Bloomberg report that estimated combined shipments of Urals crude oil from Russia at 880,000 barrels per day in the first 10 days of July likely helped lift oil prices on Monday as well. The rate of shipments, if it holds, would be the lowest level of shipments since 2008, curbing oil supply for July to Europe as demand starts to pick up across Italy, Spain and the UK as they reopen their economies. It is however, becoming more apparent that upside potential for crude oil prices are narrowing, as demand is unlikely to reach levels seen pre-Covid-19 despite its current recovery.

Oil Futures Daily Change (%) Net Change Closing Price
Brent +2.11% +0.89 43.08
WTI +2.26% +0.90 40.73
*Source: Bloomberg

Asian stocks look set to rise on Tuesday, tracking gains in the US. Stocks were likely boosted by improving preliminary PMI data for June for Australia and Japan. Potentially better-than-expected PMI data in the EU may boost stock prices in Asia as well, as improvements to the index will send positive signals for global economic activity to investors. The Nikkei, KOSPI and ASX200 were all trading higher in the first hour of Tuesday's trading session. Futures tracking major indices in the US were also trading higher, signalling that some of the optimism that helped US stocks eke out gains on Monday has likely spilled over in to Asian markets.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei +0.98% +222.86 22,660.13 8:27:40 AM
KOSPI +1.31% +28.31 2,155.04 8:47:40 AM
ASX200 +0.71% +42.46 5,987.00 8:47:15 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures +0.25% +65.00 26,018.00 8:37:37 AM
US Futures +0.22% +7.00 3,117.75 8:37:39 AM
Nasdaq Futures +0.10% +10.50 10,135.25 8:37:35 AM
*Source: Bloomberg
  • Germany June Manufacturing/Services PMI (Markit) (P) (3.30pm)
  • Eurozone June Manufacturing Services PMI (Markit) (P) (4pm)
  • UK June Manufacturing/Services PMI (Markit) (P) (4.30pm)
  • US June Manufacturing/Services PMI (Markit) (P) (9.45pm)