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US pre-open: Apple sails towards $1trn mark, despite trade frictions

01 Aug 18

LONDON (ShareCast) - (Sharecast News) - Wall Street is set for a mixed start on Wednesday on reports that the US administration is set to ratchet up the pressure on Beijing on trade.
Overnight, Bloomberg reported that the US President had instructed his country's trade representative to raise the proposed tariff that Washington was readying on another $200bn-worth of Chinese goods from 10% to 25% with an announcement possible in the next few days.

Those tariffs were not yet a given but nevertheless led to a swift response from China, where officials warned the White House against "bullying".

Commenting on the market backdrop, Craig Erlam at Oanda was telling clients: "Dominating today's U.S central bank meet is conflicting signs over the state of the Sino-U.S trade relations. It's again pulling markets in different directions on rumours that the Trump administration is expected to announce this morning plans to propose tariffs of +25% instead of the initially proposed +10% on +$200B of imported Chinese goods.

"Both equities and commodities are struggling on these headwinds to trade after China threatened to hit back if the U.S hikes tariffs"

Nevertheless, shares of Apple were holding onto the gains seen during extended hours trading during the previous session, in turn propping up all the main indices as its market value neared the $1.0trn mark.

As of 1330 BST, futures for the Nasdaq-100 were adding 20.75 points to 7,265.50, with those for the S&P 500 edging up by 0.25 points to 2,817.25 but those for the Dow Jones Industrial slipping by 29 points to 25,366.

In parallel, shares of Apple were adding more than 4% and changing hands at a fresh 52-week high.

On Tuesday, the manufacturer beat analysts' forecasts for its second quarter and guided higher for the next three months, even as both analysts and market watchers highlighted the potential for new products to act as a catalyst for the stock.

Meanwhile, front month Brent crude oil futures were down by 1.83% to $72.91 a barrel after the American Petroleum Institute reported an unexpected 5.59m barrel build in US oil stockpiles for the week ending on 27 July.

Ten-year US Treasury notes were trading on the back foot, pushing their yield higher by four basis points to 3.0%.

As an aside, strategists at Bank of America-Merrill Lynch pointed out that their 'sell-side' indicator stood at 56.9 in July down from 57.2 in the month before.

That was near a seven-year high but in-line with its 15-year average.

"The indicator has remained unchanged since the start of '18 amid uncertainty on trade/geopolitics, global growth, & CB policy. When our indicator has been this low or lower, returns over the next 12 months have been positive 93% of the time," they said.

Elsewhere in corporate news, stock in Campbell Soup was wanted after the Journal reported that activist investor Third Point LLC had build a stake in the company worth over $300m.

Sprint shares were also being bid higher after the telecommunications carrier posted first-quarter earnings per share and sales of four cents and $8.13bn, respectively, managing to edge past analysts' forecasts on both counts.

Humana Inc. was also seen gaining ground after reporting adjusted earnings per share of $3.96 for the latest three-month stretch, easily beating the consensus estimate for $3.77.

To take note of, Tesla was scheduled to report after the close of markets in New York.

Economic news was generally supportive, with consultancy ADP reporting that private sector payrolls in the US expanded by 219,000 last month (consensus: 180,000).

Still on the data calendar for later in the session were the ISM manufacturing sector survey for July at 1500 BST and the US central bank's policy announcement at 1900 BST, with no changes expected from the latter.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are end of day values only.


Market Data

Currency US Dollars
52 Week High $49.46
52 Week Low $32.83
Shares Issued 323.00m
Market Cap $15,510m


No dividends found