Asia morning update - still in consolidation

A mixed commencement for Asia markets had been the case after the tech jitters within Wall Street met with the relief that came through with Apple’s earnings after hours.

Nasdaq Source: Bloomberg

Tech concerns

Between gains for the Dow and the dips for the S&P 500 and Nasdaq indices, had been the worries building ahead of the earnings releases, Fed meeting and US-China trade talk in Washington. Particularly on the tech end of matters, the jitters had been apparent with the communication services, encapsulating the social media names, and the IT sectors leading the decline on the S&P 500 index. Industrials, however, fared slightly better as the likes of 3M shored up some gains for the markets that had previously been lost with Caterpillar.

The above said, the tide looks to have turned moderately with the arrival of Apple Inc.’s Q1 2019 earnings after hours. Apple largely delivered earnings in line with their earlier guidance, once again pinpointing the shortfall in iPhone sales to greater China weakness. The move towards other segments, however, continued to bear fruit. Both the services and the newly structured wearables, home and accessories segments saw revenue growth accelerating, contributing towards the 5.57% gain in prices after hours and likewise with US futures seen higher this morning. Q2 2019 guidance meanwhile had been placed between $55 billion to $59 billion, not straying far from the $58.83 billion forecast penned by the market at present. While Apple remains one yet to find worthy competition in the specific segment it is targeting, the demand ails from China could continue to weigh. Cook had highlighted his optimism for the US-China trade negotiations, perhaps raising the importance of this week’s talks for Apple, if not already of utmost importance.

The technology sector ETF (XLK ETF) had deviated slightly from the uptrend but barring any heightening of risk sentiment with the Fed, look to gains to shift prices back to trend with the support via Apple.

Technology Select Sector SPDR Fund

Brexit consolidation

Notably on Brexit, GBP/USD saw prices sliding sharply on Tuesday on the rejection of the Cooper amendment with regards to extending the Brexit deadline. While to a large extent this resistance around $1.32 had shown to be one keeping prices locked in consolidation ahead of progress in Brexit, hopes within the market had likely been for extensions or even a no-brexit after the previous parliamentary vote failure, thereby the reaction. There could certainly be more twist and turns with PM Theresa May due back to Brussels to re-negotiate, but with the rejection we can see this consolidation zone being formed for GBP/USD in the countdown to the deadline.

GBP/USD Mini

Asia open

A mixed open had been seen for early movers in the region with a moderate slide across the key indices. The Nikkei 225 was seen down 0.6% when last checked while mild gains were seen for the likes of the ASX 200. While Apple had delivered some upsides alongside US futures gains, the watch is on for the series of blockbuster events in the day ahead including the Federal Open Market Committee (FOMC) meeting conclusion with Fed Powell’s press conference, ones to guide the trajectory from the current consolidation. Facebook and Microsoft earnings will also be seen after the market close in the US.

Yesterday: S&P 500 -0.15%; DJIA +0.21%; DAX -0.08%; FTSE +1.29%


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