Monday, August 3, 2020

Asia Times: Apple’s stock surge more than 10% to become the world’s most valuable publicly listed company

Tags
  • Dollar
  • Gold
  • Yen
  • Euro
  • Stocks
  • Oil

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Market Recap: Apple’s stock surge more than 10% to become the world’s most valuable publicly listed company

Stocks in the US rose on Friday after an initial dip, supported by strong quarterly earnings reports from multiple major tech companies. The S&P500 traded in negative territory up until late into Friday's trading session, as optimism for the overall economy faded following disappointing earnings from Chevron (suffering an US$8.3billion loss on asset write-downs) and Exxon (second consecutive quarterly loss). The lack of a deal between US lawmakers for an additional stimulus bill also likely weighed on investors' sentiment as the federal unemployment benefit of US$600 a week expired last Friday. Apple, Amazon and Facebook were among the drivers for the overall stock market on Friday after largely surprising financial markets in their earnings reports, surging 10.47%, 8.17% and 3.70% respectively. Apple's 10.47% stock surge has now propelled the company to overtake Saudi Aramco as the world's most valuable publicly listed company.

Indexes Daily Change (%) Net Change Closing Price
Dow +0.44% +114.67 26,428.32
S&P500 +0.77% +24.90 3,271.12
Nasdaq +1.49% +157.46 10,745.27
*Source: Bloomberg

The tech rally was evident in index performance over last week as well, as the Nasdaq led gains over other major indices in the US. The tech driven CSI300 was the top performer among all other major indies around the globe. Stocks in the EU lost the most over the week, likely due to the downward pressure on the region's outlook after reports of possible spikes in new cases of Covid-19 in Spain and Germany. The strengthening euro likely also put weight on stock prices in the EU while the stronger sterling had the same effect in the UK as well.

Indexes Weekly Change (%) Net Change Closing Price
Dow -0.16% -41.57 26,428.32
S&P500 +1.73% +55.49 3,271.12
Nasdaq +3.69% +382.09 10,745.27
FTSE100 -3.69% -226.06 5,897.76
Dax -4.09% -524.70 12,313.36
Stoxx -4.12% -136.57 3,174.32
Nikkei -4.58% -1,041.61 21,710.00
CSI300 +4.20% +189.46 4,695.05
KOSPI +2.22% +48.93 2,249.37
ASX200 -1.60% -96.22 5,927.78
HSI -0.45% -109.98 24,595.35
STI -1.93% -49.69 2,529.82
*Source: Bloomberg

US stocks continued to lead monthly gains among global major indices in June, with the exception of the CSI300 and KOSPI. Gains in the month has now pushed the S&P500 to trade 1.25% higher year-to-date, while the Nasdaq (the top performer among major indices across the globe) is now 19.76% higher year-to-date, highlighting the dominant impact that tech stocks are having on both indices.

Indexes Monthly Change (%) Monthly Net Change Closing Price
Dow +2.69% +693.35 26,428.32
S&P500 +4.98% +155.26 3,271.12
Nasdaq +5.82% +590.64 10,745.27
FTSE100 -4.23% -260.20 5,897.76
Dax +0.43% +52.79 12,313.36
Stoxx -1.68% -54.13 3,174.32
Nikkei -1.86% -411.73 21,710.00
CSI300 +10.53% +447.27 4,695.05
KOSPI +6.77% +142.67 2,249.37
ASX200 -0.11% -6.62 5,927.78
HSI +0.69% +168.16 24,595.35
STI -3.08% -80.35 2,529.82
*Source: Bloomberg

The dollar managed to recover some of its losses on Friday, likely thanks to natural regression as well as rising risk that discussions for additional fiscal stimulus may be delayed longer than expected. Despite Friday's gain, the Dollar Index suffered its second week of losses above 1%, and is now trading at levels last seen in 2018. Friday also saw a reduction in consumer income, highlighting the future impact on consumer spending that high unemployment will have on the US economy moving forward, especially as the enhanced unemployment benefits ended on Friday. A slight deterioration in the University of Michigan's final estimate for consumer sentiment for July likely also weighed on investor sentiment and subsequently put some upward pressure on the dollar. For the dollar, rising Covid-19 cases as well as the upcoming fiscal stimulus bill from the US government is likely to remain in focus through the week.

The Japanese yen performed the worse among the basket of G10 currencies, along with commodity-linked ones. The dip in commodity-related currencies highlighted the shift towards risk aversion, likely as a result of a spike in Covid-19 cases in the US and the delay in fiscal spending from the US government which dampened the overall economic outlook for the rest of the world. The shift out of the Japanese yen suggests that demand for the dollar's safe haven properties may be returning, potentially putting a curb to the Dollar Yen from weakening closer towards levels seen in March.

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Safe haven assets gained on Friday thanks to increased risk aversion. Gold rose close to 1% higher and made a new intraday high of 1983.36 on Friday as the precious metal continued to sustain its demand. The yen weakened against both the dollar and euro. US Treasuries rose across the board, with benchmark 10-year yields falling 1.8bps to 0.53%.

Safe Haven Assets Daily Change (%) Net Change Closing Price
Gold +0.98% +19.22 1,975.86
Silver +3.79% +0.89 24.39
USD/JPY +1.05% +1.10 105.83
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year -1.2bps 0.11%
10-Year -1.8bps 0.53%
30-Year -1.4bps 1.19%
*Source: Bloomberg

Crude oil futures managed to eke out gains despite signals that more weakness is to be expected in the global economy. Shale explorers reduced drilling last week, as the number of active oil rigs in the US fell back by 1 to 180. Fading consumer sentiment in the US as Covid-19 cases spike and more US oil producers signalling that they are looking to restart production (ConocoPhillips said last week that it will restart most wells that were shut by September) should also start to weigh on oil prices. Supply concerns (OPEC+ is ramping up production by about 1.5 million barrels per day in August) coupled with fading demand (due to floods in parts of China and a potential spike in Covid-19 cases in the EU) should continue to weigh on oil prices, i.e. oil prices are unlikely to continue to gain in the short-term, with the exception of when the US' announces its upcoming fiscal stimulus measures.

Oil Futures Daily Change (%) Net Change Closing Price
Brent +0.62% +0.27 43.52
WTI +0.88% +0.35 40.27
*Source: Bloomberg

Stocks in Asia started the week mixed, but investor sentiment was in the region was likely more tilted to the downside due to signals that the upcoming fiscal stimulus bill from US lawmakers may be delayed longer than initially expected. White House Chief of Staff Mark Meadows said on Sunday that he wasn't optimistic on reaching a deal on additional stimulus measures for the US economy soon. The KOSPI and ASX200 were both trading lower, while the Nikkei was close to 2% higher in the early hours of Monday's trading session. Gains in the Nikkei however, is more likely due to the weakening yen rather than any optimism. Futures tracking major indices in the US were trading close to flat with the exception of the Nasdaq, suggesting that there may still be room for tech stocks to continue to rally despite rising risk aversion.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
Nikkei +1.82% +403.27 22,113.27 8:50:00 AM
KOSPI -0.24% -5.32 2,244.05 9:10:00 AM
ASX200 -0.66% -38.68 5,889.10 9:09:44 AM
*Source: Bloomberg
US Futures Daily Change (%) Net Change Last Price As of (GMT +8)
Dow Futures -0.06% -17.00 26,302.00 9:00:01 AM
US Futures +0.05% +1.75 3,265.25 9:00:01 AM
Nasdaq Futures +0.32% +35.00 10,925.50 9:00:01 AM
*Source: Bloomberg

Economic releases for the day ahead include (all timings in GMT +8):

  • China Jul Manufacturing PMI (Caixin) (9.45am)
  • Switzerland Jul Inflation Rate (CPI) (2.30pm)
  • Switzerland Jul Manufacturing PMI (3.30pm)
  • Germany Jul Manufacturing PMI (Markit) (F) (3.55pm)
  • Eurozone Jul Manufacturing PMI (Markit) (F) (4pm)
  • US Jul Manufacturing PMI (ISM) (10pm)

Companies reporting earnings next include (all timings in GMT +8):

  • Marathon Petroleum Corp (9.30pm)
  • Virgin Galactic Holdings (5am +1)