Stock Market
The US stock market seems to have changed its direction. The US and European stock futures are trading with caution as traders are unlikely to act to favour any bigger bets ahead of the most important economic reading, which is the US NFP number. There are also concerns among traders that the US stock index, the Dow Jones, which was the leader among other stock indices, has turned negative for the year, and it closed lower by 0.06% for the year.
Traders are largely worried about the ongoing banking crisis in the US, and for them, it is difficult to see where the end of the road is. They continue to panic as more and more regional US banks line up advisors for restructuring their businesses or preparing their books for sale.
Yes, it is true that the actual underlying factor that was very much behind the current chaos in the markets, the Fed’s rate hike cycle, has come to a halt for now, and the Fed wants to see how their hard work is going to slow down inflation further. But fear of further failure in the US banking sector continues to hunt traders who believe that if the situation goes out of control, we could be experiencing something as big as the financial crisis of 2007.
Forex
In the currency market, the RBA is still pursuing further tightening of monetary policy to tame inflation. The bank surprised markets this week when it raised interest rates by 25 basis points—most of the market participants have been of the mind frame that the central bank was done with its process of hiking the rates further.
Apple’s Earnings
Tech earnings are strong and solid no matter what economic data continues to tell you, and this was the message from the iPhone giant, Apple, which comfortably smashed all forecasts. Apple reported EPS of $1.52 per share vs. $1.43; its revenue was $94.84 billion vs. $92.96 billion; and its gross margin improved to 44.3% vs. 44.1%. Total net income for the quarter was $24.16 billion, which was slightly lower as compared to the same quarter last year when it reported a figure of $25.01.
Overall, the quarterly numbers reported by Apple were simply highly encouraging, especially when you look at the macroeconomic landscape. One area of concern in the earnings was Apple’s business in regional China, which includes mainland Taiwan and Hong Kong. The numbers here came in much softer; the company reported a figure of $17.81 billion in sales, when last year this number was $18.34 billion.
Something that traders will be focusing on will be its earnings from India as it opens its store presence; India is certainly a large market for Apple, and the figures produced here would be highly meaningful in its earnings.
On the macroeconomic front, Apple also sent more positive vibes by saying that it is not planning layoffs like most of the other big tech companies have started. The CEO has left that option as the last resort if the situation continues to deteriorate.
US NFP Data
Going back to the economic docket, at 1:30 PM UK time, we will have the US non-farm payroll data. Traders are not only going to be laser-focused on the headline number this time, but they will also actively pay attention to the unemployment rate and growth in hourly wage data. The expectations for the headline number are 180K, and it is widely anticipated that the unemployment rate may tick higher to 3.6% while average hourly wages could grow to 4.2% from the previous year. The economic number is highly likely to bring much bigger volatilty for the US stock market.
