After yesterday's strong u-turn on many asset classes, including stock indices or the oil market, today we are observing an attempt to continue this rebound. Futures contracts on stock indices in the United States or Germany are listed above yesterday's closing, which seems to be a consequence of the rebound in Asian markets.
Sentiment among investors, especially the US, could be improved by the excellent results of Apple, which appeared after the session. Revenues from the sale of iPhones amounted to 55.96 billion dollars and again accounted for more than half of the company's total sales. This means an increase of 7 percent y/y and this was the second highest quarterly iPhone revenues in Apple's history. For the entire quarter, the Cupertino giant had revenues of USD 91.82 billion. It is worth noting that the products from the wearables category brought revenues exceeding USD 10 billion for the first time. Nevertheless, Apple points to events in China because the company has suppliers based in Wuhan, but also has alternative sources for these parts of the supply chain, said Tim Cook. Therefore, the company estimates revenues in the next quarter at USD 63-67 billion, and the range of these predictions is larger than usual due to the extraordinary situation in China.
Meanwhile, oil prices have risen today by more than 1 percent in the morning, after a combined decline of more than 20 percent since January 8. It seems that the rebound in oil prices may be based on information that OPEC may extend oil production cuts until June from the currently set deadline to March. The Organization may also further reduce supply if oil demand in China is significantly reduced by spreading a virus. The OPEC and OPEC + countries will not meet until March, but markets are already speculating about possible further actions to stabilize oil prices.
On the currency market, investors are awaiting today's Federal Reserve decision on interest rates. The dollar is close to its highest level in seven weeks, and seems to be supported by an earlier return to safe assets and the dollar as a global reserve currency. According to the market, the Fed interest rate will not change today, and the nearest chances for a possible cut indicate the months after September 2020. Nevertheless, the press conference and the Fed's view of the economic situation may be important, which may be worsened now not by trade war but by the impact of the virus on China's economy and supply chain. The FOMC decision will take place at 20:00, and Jerome Powell's conference will start half an hour later.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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