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Research Market strategy
by Swissquote Analysts
Morning News

Apple Makes Rare Cut to Sales Guidance

Topic of the day

Apple Inc. lowered its sales forecast for its fiscal first quarter, a rare revision to its guidance, blaming slowing sales of smartphones and other devices in China. Apple Chief Executive Tim Cook said in a letter to investors on Wednesday that the company now predicts revenue of around $84 billion for the quarter ended Dec. 29. Previously the company said revenue would be between $89 billion and $93 billion for the quarter. Analysts surveyed by FactSet forecast more than $91 billion. Mr. Cook said Apple anticipated challenges in key emerging markets, but didn't expect the magnitude of the economic deceleration, especially in China. A contraction in the region's smartphone market was particularly sharp, he said. "Most of our revenue shortfall to our guidance, and over 100% of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad," Mr. Cook wrote. "As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed," he wrote in the letter.

Swiss stocks

After falling to an annual low Thursday, the SMI staged a recovery on Friday, the last trading day of the year, rising 2.9 percent to 8,429 points, buoyed by strong US markets. All 20 index components closed up, with price increases ranging from 1.6 percent for Givaudan up to 4.1 percent for UBS.

International markets

Europe

The Stoxx Europe 600 fell 0.1%, or 0.3 point, to 337.34 as fears about global economic growth hit sentiment after downbeat Chinese manufacturing data. The DAX rose 0.2% but the CAC-40 fell 0.8%. China's Caixin manufacturing PMI came in at 49.7, signalling contraction for the first time in more than a year and a half. The downbeat mood hit shares in auto-makers and miners, with French car-part maker Faurecia off 5.75% and Glencore down 3.3%. The FTSE 100 rose 0.1%.

United States

U.S. stocks swung in trading between small gains and losses intraday in the first session of the year, extending a recent stretch of volatility as anxiety about global growth and interest rates ripples across markets. The Dow Jones Industrial Average was recently down 25 points, or 0.1%, at 23302, after sliding nearly 400 points to start the day, then rebounding briefly into positive territory. The S&P 500 climbed 0.2%. Both benchmarks trimmed some of their 2018 drops in the final sessions of December but logged their worst year in a decade following a turbulent quarter. The tech-heavy Nasdaq Composite rose 0.6%. While fears about weak economic growth have swung risky investments in recent months, a resolution in the U.S.-China trade spat could improve the outlook for the global economy, investors say. Tepid economic figures could also give the Federal Reserve more freedom to cool its pace of rate increases, making stocks more attractive.

Asia

China's Shanghai and Hong Kong benchmarks both opened lower, by less than 0.5%. Apple suppliers including AAC Tech and Sunny Optical both fall more than 4% in Hong Kong. Elsewhere in Asia, indexes in South Korea, Taiwan and Singapore were also down.

Bonds

The nearly two-month-long rally in U.S. government bonds continued into the new year intraday, as investors scooped up safer assets in the wake of soft Chinese manufacturing data. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 2.665%, according to Tradeweb, compared with 2.684% Monday. U.S. markets were closed Tuesday for the New Year's holiday. Yields, which fall when bond prices rise, declined overnight after the Caixin China manufacturing purchasing managers index fell to 49.7 in December from 50.2 in November.

Analysis

IR downgrades Lanxess target to 45 (59) EUR - Hold
Berenberg raises TAG Immob. to 23,50 (22) EUR - Buy
JPM raises Morphosys target to 135 (120) EUR/Overweight
Citi upgrades Lufthansa to Neutral

Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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