Apple’s shares edge higher after earnings beat

Today’s headlines

What’s happening: Shares of Apple rose in after-hours trading on Thursday, following the company’s release of its fiscal third-quarter results.

What happened: The iPhone maker reported stronger-than-expected earnings for its third quarter.

While sales in Apple’s Services segment reached a record high, the company’s performance in China limited the overall gains in the stock.

How were the results: The Cupertino, California-based company’s sales and earnings grew on a year-over-year basis but was down versus the prior quarter.

• Revenues grew to $85.78 billion, from $81.80 billion in the year-ago period, but came in lower than the $90.75 billion recorded in the prior quarter. The figure still topped consensus estimates of $84.53 billion.
• Adjusted earnings rose to $1.40 per share, from $1.26 per share in the same quarter last year, but was lower than the $1.53 per share reported in the fiscal second quarter. The latest figure came in better than Wall Street expectations of $1.35 per share.

Why it matters: Sales in Apple’s Services segment, which includes the App Store and Apple Music and TV products, surged 14.1% to a record high of $24.21 billion, beating market estimates of $24.01 billion.

Sales of iPhone, iPad and Wearable, Home & Accessories also topped market expectations. iPhone sales fell lower-than-expected in the quarter, declining 0.9% versus market views of a 2.2% drop. Mac sales rose 2.5% to $7.01 billion, marginally missing expectations of $7.02 billion.

Apple’s sales in China, its third-largest market, were a major concern, as revenues contracted both on a year-over-year and sequential basis. Sales in China fell 6.5% in the third quarter, after an 8.1% decline in the prior quarter, and much wider than market expectations of a 2.4% contraction.

The company had unveiled a slew of AI products and services under the Apple Intelligence umbrella, during its developer conference in June. There are wide speculations of Apple announcing a major software upgrade for its iPhone 16 series, scheduled to be launched in September. This launch with AI features comes much later than rivals rolling out similar features in Android phones.

How shares responded: Apple’s shares gained 0.6% to $219.65 in extended trading on Thursday, following the release of quarterly results. The stock has jumped around 17% over the past six months.

What to watch: The upcoming release of iPhone 16 and the company’s performance in China will be on focus.

The markets today

The British pound will be in focus today after declining on Thursday

Context: The GBP/USD forex pair fell sharply on Thursday as investors assessed the Bank of England’s interest rate decision.

Details: The Bank of England lowered its benchmark interest rate from a 16-year high on Thursday, following a tight vote by policymakers. The rate was cut by 25 basis points to 5% at the meeting.

Meanwhile, the US Federal Reserve kept interest rates unchanged at its latest policy meeting earlier this week. However, Fed Chairman Jerome Powell issued dovish comments at the end of the bank’s two-day meeting, fuelling speculations of three cuts of 25 basis points each by the end of the year.

Strength in the US dollar exerted pressure on the GBP/USD. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.4% to 104.42 on Thursday.

The GBP/USD forex pair fell around 0.9% to 1.2740 on Thursday. The FTSE 100 tumbled 1.01% to close at 8,283.36.

What to watch: Investors await the release of jobs data from the US today, which is expected to significantly impact the GBP/USD. The US economy is expected to add 175,000 jobs in July, below the 206,000 recorded in the prior month.

Analysts expect the unemployment rate to remain unchanged at 4.1% in July, the highest level since November 2021. Wages are projected to increase by 0.3%, the same as in the prior month, while the yearly gain is likely to ease to 3.7% in July, from 3.9% in June.

Other Markets: US trading indices closed lower on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.21%, 1.37% and 2.44%, respectively.

The news shaping the markets

Ukraine received the first batch of F-16 jets in a bid to rebuild its Air Force for its war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.

Australia’s value of new home loans grew by 0.5% to A$18.17 billion in June, versus market expectations of a 1.0% decline, lending support to the AUD/USD forex pair.

South Korea’s annual inflation rate accelerated to 2.6% year-over-year in July, from 2.4% in June. The latest reading coming in above market expectations of 2.5% sent the KRW/USD pair lower in forex trading this morning.

Mexico’s S&P Global manufacturing PMI declined to 49.6 in July, from 51.1 in the earlier month. The latest reading signalled the first contraction in factory activity in ten months, which exerted pressure on the MXN/USD forex pair.

Colombia’s Davivienda manufacturing PMI came in unchanged at 50.0 for July, sending the COP/USD pair slightly lower in forex trading this morning.

What else to watch today

France’s industrial production and government budget value, Spain’s unemployment change and tourist arrivals, Brazil’s industrial production and IPC-Fipe inflation, Italy’s industrial production and retail sales, India’s foreign exchange reserves, Mexico’s unemployment rate and gross fixed investment, Singapore’s manufacturing PMI, US factory orders, Baker Hughes crude oil rigs and Baker Hughes total rigs, as well as Turkey’s total motor vehicles production, total vehicle sales and balance of trade.