Early Morning Call: trend continues for US tech stocks as Apple's market cap now below $2tln
Europe expected to open up. APAC markets rise apart from the Nikkei as the yen holds gains. US tech stocks meanwhile continue to be the whipping boy.
Equity market overview
It was another mixed session in the Asia-Pacific region.
The Japanese stock exchange resumed trading after a holiday on Tuesday and ended the session down 1.45%. In Australia, tge S&P/ASX 200 rebounded after ending at a near two-month low yesterday. The index showed gains across all sectors.
In the US, the three main indices closed in negative territory, dragged down by tech stocks. Tesla shares recorded their sharpest drop since September 2020, and Apple fell 3.8%, taking the group’s market capitalisation below $2 trillion.
In Europe, equity markets opened in the green this morning, following a positive session yesterday. European indices got a boost from travel stocks yesterday. TUI and Carnival were among the best performers.
This morning Ryanair reported that its traffic grew by 21% in December 2022 to 11.5 million passengers. It operated 65.500 flights in the period and load factor reached 92%.
In Japan, the final reading of Jibun Bank manufacturing PMI shows that factory activity in the country fell at the sharpest pace in 26 months. PMI edged down to 48.9 in December from 49 in November, below 50 for a second straight month. Although slightly higher than a preliminary estimate of 48.8, this reading is the weakest since October 2020.
Details of the survey show that output and new orders extended their contraction for a sixth month. Manufacturers expect a further downturn in their business conditions, with the subindex of future output hitting the lowest level since May.
In France, consumer price index (CPI) came in at 5.9% for December year-on-year (YoY). Economists expected a rise of 6.4%, after 6.2% the previous month. However INSEE, the French official body for statistics, said yesterday that it expects inflation to continue to rise in the coming months.
At 3pm, we await US ISM manufacturing PMI. Economists expect the index to fall to 48.5 in December, from 49 the previous month.
And at 7pm, the Federal Reserve (Fed) will release the minutes of its December policy meeting. At that meeting the Fed raised interest rates by 50 basis points (bp), bringing total increases to its benchmark policy rate to 4.25% in 2022. This was after pushing rates up by 75bp at each of the prior four meetings stressing the need to move rates into restrictive territory to bring down inflation.
It's unlikely though that the minutes will be as critical as the incoming jobs data from ADP on Thursday and the labour department on Friday with non-farm payrolls.
Commodities
Yesterday was a choppy session on the oil market. Brent posted its largest decline in three months as China's economic worries weighed on oil prices.
Yesterday, the Caixin Manufacturing PMI fell further in December, marking another month of contraction in factory activity and the lowest level since September.
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