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Apple Shares Spike on Blowout Quarter

The news shaping the markets today

Singapore’s unemployment rate fell to 2.4% in the fourth quarter, from 2.6% in the previous quarter. The country recording the lowest jobless rate since Q4 of 2019 lent support to the SGD/USD forex pair.


Australia’s final demand producer price index rose by 1.3% in the fourth quarter, following a 1.1% increase in the third quarter. Despite this being the highest reading since Q3 of 2013, the AUD/USD pair rose in forex trading this morning.


South Korea’s retail sales grew 6.5% year-over-year in December, following 4.6% growth in the previous month. Although this was the eleventh straight month of growth in retail sales, the KRW/USD forex pair remained under pressure.


Taiwan’s IHS Markit manufacturing PMI fell to 55.1 in January, from a four-month high of 55.5 in the previous month, sending the TWD/USD pair lower in forex trading this morning.


Mexico’s trade surplus narrowed to $0.59 billion in December, from $6.2 billion in the year-ago month. However, exports jumped 10.8% to $47.7 billion, lending support to the MXN/USD forex pair.

 

What’s happening: Shares of Apple gained in after-hours trading on Thursday, after the company reported strong results for the fiscal first quarter.

What happened: The world’s largest company by market capitalisation overcame the global chips shortage to deliver record sales.

However, one of Apple’s segments failed to meet sales estimates for the latest quarter.

How were the results: The Cupertino, California-based company reported growth in both sales and earnings for the fiscal first quarter ending December 25.

  • Sales surged 11% to a record $123.9 billion, surpassing Street expectations of $119.1 billion.
  • Earnings grew to $34.6 billion, or $2.10 per share, well ahead of the consensus estimate of $1.90 per share.

Why it matters: Apple CEO Tim Cook had warned late last year that supply issues could impact sales by more than $6 billion in the holiday season.

However, the iPhone maker brushed off the supply crisis and recorded strong quarterly results, driven by new product launches, including the iPhone 13 and Apple Watch Series 7.

Apple generated robust iPhone sales in China, becoming the top-selling vendor in the country for the first time in six years. Sales from Apple’s flagship product surged 9.2% year-over-year to $71.6 billion, exceeding market views of $67.7 billion, with this being the first full quarter of sales from iPhone 13, which hit the market in September.

However, revenues from the iPad fell 14% to $7.25 billion and came in below market expectations of $8.1 billion.

Apple announced the launch of a new MacBook Pro in the quarter and generated around $10.9 billion in Mac sales, ahead of the consensus estimate of $9.5 billion.

Given the strong operating results, the company returned around $27 billion to shareholders last quarter.

During the earnings call, management said they expect the supply concerns to ease in the March quarter but warned of a deceleration in growth. While Apple did not issue a sales forecast for the current quarter, it guided to gross margins between 42.5% and 43.5%. Analysts on average expect Apple’s revenues to top $90 billion in the quarter.

How shares responded: Apple’s shares surged 5% to $167.23 in after-hours trading, following the release of quarterly results. The stock had shed around 11% over the past month.

What to watch: Investors will keep an eye on Apple’s upcoming launches, including that of iPhone SE3. The company is expected to launch four new iPhones and several Macs during the fall.

Markets will continue monitoring the company’s metaverse plans after CEO Tim Cook announced plans to expand Apple’s augmented reality apps. Investors will also watch the Fed’s interest rate announcements, which has triggered the recent selloff in tech stocks.

The markets today

European stocks will be in focus today ahead of a basket of economic reports from the common bloc

 

Context: European markets settled higher in another volatile session on Thursday, as global investors monitored the policy announcement from the US Federal Reserve.

Details: European markets responded to the Fed’s policy decision on Thursday, as the announcement came in after markets closed in Europe on Wednesday. The Fed held its interest rates unchanged at its latest meeting but indicated that a rate hike may be announced as early as March.

Upbeat GDP data from the US also provided support to the European markets on Thursday. The country’s gross domestic product surged 6.9% in the fourth quarter, surpassing market expectations of 5.5% growth. Investor sentiment was also lifted by an improvement in Germany’s GfK consumer sentiment index to -6.7 in January, from a reading of -6.9 in the previous month.

Investors also monitored earnings reports from major companies, including Deutsche Bank, UniCredit, SAP, LVMH, STMicroelectronics and Diageo. Shares of Deutsche Bank gained more than 4% on Thursday after the company reported €145 million in profits for the fourth quarter.

The pan-European Stoxx 600 gained 0.65% to close at 470.33 on Thursday, after recording losses earlier in the session. Stocks of utilities were the top performers, while travel stocks bucked the overall market trend and declined around 1.5%.

London’s FTSE 100 gained 1.13%, while the DAX 40 and CAC 40 added 0.42% and 0.60%, respectively.

What to watch: Traders await data on the economic sentiment indicator, industry confidence indicator and consumer confidence indicator from the Eurozone today. The economic sentiment indicator is expected to decline to 114.5 in January, from 115.3 in December, while the industry confidence indicator is projected to rise slightly to 15, from 14.9 in the previous month. Analysts expect Eurozone’s consumer confidence indicator to decline slightly to -8.5 in January.

Other Markets: US indices closed mostly lower on Thursday, with the Dow Jones, S&P 500 and Nasdaq 100 down by 0.02%, 0.54% and 1.20%, respectively.

Support & resistances for today

Technical Levels News Sentiment
CAC 40 – 6,993.28 and 7,030.49 Positive
DAX 40 – 15,458.47 and 15,533.18 Positive
EUR/USD – 1.1149 and 1.1155 Positive
AUD/USD – 0.7040 and 0.7048 Positive
Gold – 1,796.71 and 1,797.66 Positive

Market snapshot

What else to watch today

France’s GDP growth rate, industrial producer prices and household spending, Germany’s import prices and GDP growth rate, Turkey’s economic confidence index, Spain’s GDP growth rate and industrial confidence indicator, Eurozone’s loans to non-financial corporations, loans to households, money supply M3, consumer inflation expectations index, services confidence indicator and selling price expectations, Italy’s consumer confidence, manufacturing confidence and producer price inflation, India’s value of loans, value of deposits and foreign exchange reserves, Brazil’s unemployment rate and value of loans, US personal income, personal spending, personal consumption expenditure price index, employment cost index, University of Michigan consumer sentiment and Baker Hughes crude oil rigs, Argentina’s consumer confidence, Saudi Arabia’s bank lending growth and money supply M3, as well as Canada’s government budget value.


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