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Apple shares take a hit despite upbeat Q2 print

The news shaping the markets today

Ukraine’s officials said Russia fired two missiles into Kyiv, even as UN Secretary General Antonio Guterres was visiting the capital city. The RUB/USD forex pair came under further pressure after the news.


Australia’s final demand producer price index rose by 1.6% in the first quarter, from a 1.3% increase in the fourth quarter. This was the seventh consecutive quarter of growth in the index, which sent the AUD/USD pair higher in forex trading this morning.


Vietnam’s annual inflation rate accelerated to an eight-month high of 2.64% in April, from 2.41% in the prior month, exerting pressure on the VND/USD forex pair.


Singapore’s bank loans grew to a new record high of S$829.9 billion in March, from S$829.5 billion a month ago. Despite this, the SGD/USD pair rose in forex trading this morning.


Brazil’s economy added a net 136,200 formal jobs during March, following 328,500 net job additions in the previous month. The news sent the BRL/USD forex pair higher.

 

What’s happening: Shares of Apple fell in after-hours trading on Thursday, despite the company reporting better-than-expected results for its fiscal second quarter.

What happened: Markets were expecting a decline in consumer spending on tech gadgets and services due to the ongoing Russia-Ukraine war and rising inflation around the world. Despite these conditions, Apple managed to exceed market estimates for the quarter. However, one of its major segments reported a year-over-year contraction in sales.

How were the results: The world’s largest company by market capitalization reported year-on-year growth in both sales and earnings for its fiscal second quarter. However, both figures represented a sequential contraction.

  • Revenues grew 9% year-over-year to $97.3 billion, exceeding market views of $93.89 billion.
  • Earnings came in at $1.52 per share, higher than Street expectations of $1.43 per share.
  • While earnings for the latest quarter was higher than the year-ago figure of $1.40 per share, it came in lower than the $2.10 per share reported in the previous quarter.

Why it matters: The iPhone maker had reported record high revenues of $123.9 billion in the previous quarter. Apple’s fiscal first quarter is always the strongest due to the all-important holiday period. Although the latest revenue figure was lower than the previous quarter’s revenues, it was the highest the company has ever reported for the March quarter.

All product categories, except the iPad, delivered year-over-year growth in revenues. Global phone sales grew 5.5% year-over-year to $50.6 billion. Services, the company’s second-largest segment, reported 17% growth in sales to $19.8 billion.

While Apple’s revenues from the Americas segment grew, sales in Japan and the rest of the Asia-Pacific region fell. Sales in the Americas grew 19%, and by single digits in Europe and China.

The company generated $28 billion in operating cash flows and returned about $27 billion to shareholders during the quarter. Apple raised the dividend from 22 cents to 23 cents per share and announced the authorisation of another $90 billion in share repurchases.

How shares responded: Apple’s shares fell 2.2% to $159.98 in extended trading, following the release of quarterly results late Thursday. The stock had added 4.5% during the regular trading session in anticipation of the earnings release.

What to watch: Investors will keep an eye on the resurgence of covid-19 cases in China, which has resulted in the closure of production plants of Apple’s various suppliers. Markets will also monitor the spread of infections other regions, as this could cause supply chain issues to worsen.

 

The markets today

The Canadian dollar will be in focus today ahead of a basket of major economic reports from the country

 

Context: The CAD/USD pair settled almost flat on Thursday, after tumbling to its weakest level in more than seven weeks during the session.

Details: The CAD/USD forex pair came under significant pressure during the early hours of the session on Thursday, mainly due to solid gains for the US dollar. The greenback climbed to its strongest level in two decades versus a basket of major currencies on Thursday. The US dollar index, which tracks the greenback’s performance versus a basket of major currencies, gained around 0.65% to close at 103.62.

A surge in prices of crude oil, one of Canada’s major exports, provided some support to the loonie later in the session. WTI crude prices jumped 3.3% to settle at $105.36 per barrel on Thursday.

Investors also responded to Bank of Canada Governor Tiff Macklem’s comments around the country’s economy becoming overheated and causing inflationary pressures. Canada’s consumer prices rose 6.7% in March, the quickest pace since January 1991. Markets expect the Bank of Canada to hike interest rates by 0.5% at each of its next two policy meetings.

On the economic data front, Canada reported an increase in payroll employment by 142,900 in February, while the average weekly earnings of non-farm payroll employees rose 2.4% year-over-year to C$1,161.

The CAD/USD forex pair settled almost flat at 1.2821 on Thursday, after hitting its lowest level since March 9.

What to watch: Investors await the release of economic data on GDP, raw materials prices and government budget value from Canada today. The Canadian economy, which expanded 0.2% in January, is expected to grow by 0.8% in February. Canada’s government budget deficit, which shrank to C$5.2 billion in January, is projected to narrow to C$0.4 billion in February.

Markets will keep an eye on rising covid-19 cases, the ongoing Russia-Ukraine war and rising inflation.

Other Markets: European trading indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 1.13%, 1.35%, 0.98% and 0.62%, respectively.

 

 

Support & resistances for today

Technical Levels News Sentiment
USD/CAD – 1.2777 and 1.2790
Negative
AUD/USD – 0.7122 and 0.7134 Positive
FTSE 100 – 7489.89 and 7501.76 Negative
Nikkei 225 – 26752.16 and 26806.66 Negative
WTI Crude Oil – 104.62 and 104.88 Positive

Market snapshot

What else to watch today

France’s GDP growth rate, household consumption, inflation rate and producer prices, Germany’s import prices and GDP growth rate, South Africa’s private sector credit, balance of trade and money supply M3, Spain’s gross domestic product, retail sales and current account, Turkey’s balance of trade, tourism revenues and tourist arrivals, Eurozone’s loans to households, loans to private sector, money supply M3, GDP growth rate and inflation rate, Italy’s gross domestic product, inflation rate, and producer price inflation, Russia’s money supply M2, corporate profits and Central Bank of Russia’s interest rate decision, Mexico’s GDP growth rate, India’s infrastructure output, foreign exchange reserves and central government budget value, Brazil’s unemployment rate, IBC-Br index of economic activity, current account, foreign direct investment, government budget value and value of loans, US personal spending, employment cost index, personal consumption expenditure price index, Chicago PMI, University of Michigan consumer sentiment and Baker Hughes total rigs, as well as Argentina’s consumer confidence indicator.


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