23 June 2020

WWDC Update: Apple Will No Longer Have Intel Inside

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News shaping
the markets today

     

What’s happening: Apple Inc. hosted its annual WWDC (Worldwide Developers Conference) on Monday, making several announcements and launching product updates.

What happened: The much-anticipated annual event, which is usually hosted in a massive conference hall packed with developers and people from the press, was held this year in a virtual-only mode for the first time due to the pandemic.

During the event, Apple bid farewell to a 15-year partnership with Intel and announced the transition to its own chips. The event also saw CEO Tim Cook and other executives from the company streaming several product announcements, minus the usual cheers from the audience.

Why it matters: Apple’s shares gained 2.6% in regular trading on Monday after the company confirmed that it would no longer use Intel chips to power its devices. Investors responded to the official announcement, although this was widely expected with reports of a switch doing the rounds for months.

The tech giant claimed that the transition to Apple Silicon will give greater control over how it builds its products and improve performance. The move will ensure a common architecture across all Apple products, enabling app developers to create and optimise their apps for the entire ecosystem.

“With its powerful features and industry-leading performance, Apple Silicon will make the Mac stronger and more capable than ever. I've never been more excited about the future of the Mac,” CEO Tim Cook said at the event.

Apple plans to ship the first Mac with its own chip by the end of this year and is hoping to complete the transition within the next couple of years. The company reassured customers that it intends to continue supporting and releasing new versions of the macOS for its Intel-based Macs.

Management also announced an upgrade to iOS 14, which will now feature the new App Library allowing users to organise applications in folders. The company has also redesigned its home screen and announced a new design for Siri.

Apple also launched some new features to iPadOS 14, watchOS 7 and AirPods. The company announced a new software update for Apple TV and a marketplace for Safari as part of the Mac App Store.

After climbing during the regular session, Apple’s stock gained another 0.9% in after-hours trading. Apple’s shares supported the Nasdaq 100 to hit a new record high on Monday. The tech-laden index rose by 1.1% to end the day at 10,056.47. The S&P 500 gained 0.65% to 3,117.86, while the Dow Jones index rose 0.59% to reach 26,024.96 in high volume indices trading.

What to watch: Investors were a tad disappointed with Apple not announcing any new hardware at the WWDC. Bulls consider this a good move, considering the pandemic this year and the need to conserve liquidity. Apple is expected to make hardware-related announcements in the fall, which could attract more interest from investors. The market will also look out for Apple’s plans to reopen stores that have recently been closed with rising cases in the US.

The Markets Today

     

Crude oil will be in focus today, ahead of the API (American Petroleum Institute) report on crude inventories.

Context: Crude oil closed higher on Monday, as experts raised their long-term forecast for the commodity. July contract for WTI crude futures also expired yesterday.

Details: Coronavirus infections rose over the weekend, with countries other than the US also reporting an increase in cases. South Korea saw the arrival of a second wave of coronavirus infections in the country, while Germany’s infection rate also climbed. The World Health Organization disclosed a record surge in worldwide infections on Sunday. 

Despite the higher infections, various experts projected a rebound in crude oil as economies showed signs of a recovery from the impact of the pandemic.

BofA Global Research raised its 2020 Brent price outlook from $37 per barrel to $43.70 per barrel. WTI crude oil price forecast for 2020 was also raised from $32 per barrel to $39.70 per barrel. The strategists also lifted their Brent crude oil price outlook for 2021 and 2022 to $50 per barrel and $55 per barrel, respectively.

After gaining 9.6% last week, WTI (West Texas Intermediate) crude for July delivery gained 1.8% to end at $40.46 per barrel on the NYMEX (New York Mercantile Exchange). The new front month WTI contract for August rose 2.3% to $40.73 a barrel.

Brent oil for August delivery climbed 2.1% at $43.08 a barrel, following a weekly gain of 8.9%. July natural gas slipped 0.3% to $1.664 per million British thermal units.

What to watch: With OPEC reviewing its output cuts on a monthly basis, it is still unclear whether the group will extend output cuts into August.

Markets await the crude oil stockpile report from the API. Stocks of crude oil in the US had risen 3.9 million barrels in the week ending June 12.

Other Markets: European indices were trading higher at 8:30am GMT, with the FTSE 100, French 40 and Dax 30 index up by 0.7%, 1.2% and 1.6%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

UAE’s inflation rate as well as the US Redbook index, IHS Markit US manufacturing PMI, services PMI, composite PMI, new home sales and Richmond Fed manufacturing index.

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