FTSE -7 points at 7243
DAX -2 points at 12505
CAC -1 points at 5303
Euro Stoxx -3 points at 3575
Apple (NASDAQ:AAPL) announced one percent year-on-year fall in iPhone sales in the first three months of 2017; though the actual sales printed 1% increase in revenues as clients opted for the more expansive iPhone 7 Plus. CEO Tim Cook suggested that the slowdown in sales could be partly due to clients waiting for the new iPhone 8. Either way, the contraction in iPhone sales was offset by 18% revenue increase from Apple services, such as iCloud, App Store and Apple Pay.
Still, investors were disappointed as Apple missed estimates on revenue and forecasts for the third quarter and preferred trimming their positions in the after-hours trading. Apple shares retraced nearly 2%, the CFDs retreated to $146.80 after the stock traded at an all-time high of $148.09 on Tuesday. Loses could remain limited on Apple's promises to redistribute a part of its $257 billion cash holdings at the end of the quarter. The company announced $50 billion in buy-backs and a higher dividend of 63c, up from 57c and slightly better than 62c expected by analysts.
Nasdaq 100 rolling index withdrew on Apple disenchantment, after renewing record for the second consecutive day.
Else, the S&P 500 tested the $2’400 offers for the second straight day. The Dow Jones remained slightly shy of the $21,000 hurdle as Donald Trump tweeted:
Our country needs a good "shutdown" in September to fix mess
The ADP employment report and the Federal Reserve (Fed) policy decision are the major highlights of the day for the USD traders.
The US economy may have added 175,000 new private jobs in April versus 263,000 printed a month earlier. Due on Friday, the consensus for the nonfarm payrolls (NFPs) is 190.000 versus 98,000 in March.
The Fed is expected to maintain the status quo. The FOMC’s accompanying statement will be the major focus as investors will be seeking any hints or details regarding the Fed’s interest rate policy outlook, the balance sheet shrinkage plans, and whether the portfolio normalization would interfere with the speed of the rate normalization. The Fed is expected to proceed with two to three more interest rate hikes in 2017. The probability of a June rate hike stands at 67.1% before today’s decision.
Gold tests support at $1257/1252 (major 38.2% retracement on March – April rise / 200-day moving average). Breaking below this critical support zone should suggest a short-term bearish reversal and encourage a further slide toward $1245 (50% retrace) and $1233 (major 61.8% retrace). Inability to fight back dip-buyers would hint at a price recovery with a reasonable target at $1,270.
WTI rebounded from $47.35 on Tuesday amid the API report printed 4.16 million barrel slump in the US crude supplies last week. The EIA data is due today and is expected to print 3.3 million barrel of weekly contraction in the US oil inventories, versus 3.6 million barrel fall a week ago. Declining oil supply and falling inventories could encourage a minor recovery in the oil markets. Resistance is eyed at $49.40 (200-day moving average) before the $50/per barrel handle.
The USD/JPY is fighting back the resistance pre-112.15 (major 38.2% retracement on December – April decline). Surpassing this level would signal a short-term bullish reversal and encourage a further rise toward 112.50 (100-day moving average) and bring the 115.00 mark back on the radar. The US yields and the US dollar appetite will be determinant in the USDJPY’s trajectory for the rest of the week. Strong US jobs data and hawkish Fed expectations could underpin the positive momentum in USD/JPY; 112.45/112.50 call options are waiting to be exercised at today’s expiry. Meanwhile, a softer policy stance from the Fed and a second month of disappointment regarding the NFPs could dent the appetite and limit gains at the current levels.
Nikkei (+0.70%) and Topix (+0.68%) are better bid on softer yen. Shanghai’s Composite (-0.33%) couldn’t regain its smile despite the second day of drop in China’s benchmark repo rates as the People’s Bank of China (PBoC) added more cash in the financial system.
Brexit tensions between London and Brussels rise. FT reported that the costs of the divorce could reach $100 billion based on the EU demands. The EU’s chief negotiator Michel Barnier is expected to reveal more details today.
The pound remains strong despite the rising Brexit tensions, as the UK is focused on June 8th snap election, where PM Theresa May will be seeking to consolidate and eventually to extend her power at the heart of the government. Many believe that a stronger support for Theresa May could result in more favourable Brexit negotiations for the UK. Cable remains well bid with 1.30 target as the next stop.
A dollar-pound quotation above the 1.30 hurdle and softer commodity prices could dent the appetite in the FTSE stocks. The FTSE is set for a softer open in London.
Sainsbury's (OTC:JSAIY) adjusted profit before tax GBP 581mn beat the estimate of GBP 579.6mn. Final dividend per share is 6.6p. The company sees GBP 160 million EBITDA synergy from Argos deal 6-month early. (Bloomberg news)
In France, Emmanuel Macron will face Marine Le Pen in a televised debate before the final round of the presidential election due on May 7th. Latest news hint that 60% of the far-left Mélenchon’s supporters would not vote for Macron. Still, the opinion polls suggest that 60% of the overall voters would like to see Macron as the next French President. The Macron-win being fully priced in, the euro risks would be on the bearish side, if Marine Le Pen displays a better-than-expected performance at tonight’s debate. We remind that the latest fraud allegations and the plagiarism scandal weigh on the anti-EU candidate's popularity.
The EUR/USD stagnates a touch below the 1.10 mark before the release of the Eurozone's preliminary GDP data, expected to point at 0.5% quarter-on-quarter growth versus 0.4% previously.
Quick glance at technicals on LCG Trader:
Natural gas intraday: under pressure. Short positions below 3.2050 (pivot) with targets at 3.1600 & 3.1460. Above 3.2050, upside potential to 3.2210 & 3.2440.
Copper intraday: under pressure. Short positions below 2.6330 (pivot) with targets at 2.6000 & 2.5870 in extension. Above 2.6330, upside potential to 2.6410 & 2.6520.
EUR/AUD intraday: Long positions above 1.4505 (pivot) with targets at 1.4610 & 1.4650 in extension. Below 1.4505, downside potential to 1.4475 & 1.4440.