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Research Market strategy
by Swissquote Analysts
Morning News

Apple Sales Surge as Pandemic Drives Software and Device Purchases

Topic of the day

Apple Inc. showed the technology industry's resilience amid the pandemic, reporting a better-than-expected 11% increase in quarterly sales from a year earlier as it benefited from strong demand for apps and work-from-home devices and avoided a downturn in its iPhone business. The tech giant posted revenue in its fiscal third quarter of $59.69 billion, even as a new wave of coronavirus outbreaks across the U.S. forced the company to again close stores. Profit rose about 12% to $11.25 billion, or $2.58 a share. The results exceeded analysts' expectations of $52.24 billion in revenue for the three months ended June 27. Apple and its tech peers have outperformed other industries upended by the pandemic because of their roles providing the goods and services people have turned to as they work remotely and spent less time venturing outside the home. Apple said its board also approved a four-for-one stock split, aiming to make the stock more accessible to a wider investor base. On Thursday, before the results, shares closed at $384.76. Shares rose 5% in after-hours trading. The company's stock price has risen more than 31% since the start of the year, adding more than $350 billion in market value.


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Swiss stocks

The Swiss stock market took a sharp downturn on Thursday. The SMI lost 1.7 percent to 10,095 points. For the Nestle share it went down after mixed business figures by 0.7 per cent. Although the organic growth exceeded expectations by a tick, Nestle reduced it for the whole year thereafter. The results of the cement manufacturers were seen as "very respectable in view of the crisis". Both Lafargeholcim and Heidelbergcement came through the coronavirus crisis a tick better than expected, it was said. Lafargeholcim fell by 2.6 percent. CS Group shares fell by 1.6 percent. According to Morgan Stanley, the bank is in a good position. Thanks to strong trading results in investment banking, pre-tax profit at group level exceeded expectations by 38 percent in the second quarter. The revenue situation is also consistently strong. The equity ratio of 12.5 percent was also positive for the analysts - 90 basis points better than expected by consensus. UBS lost 2.3 percent and Swiss Re lost 4.4 percent.

International markets

Europe

European stocks decline on worries about a second coronavirus wave and after data showed the German and US economies contracted in 2Q. The Stoxx Europe 600 falls 2.2%, the FTSE 100 decreases 2.3%, the DAX slides 3.5% and the CAC-40 sheds 2.1%. "Thursday's German and US GDP readings have acted as something of a wake-up call for investors, reminding them exactly what the economic cost of this pandemic--which is far from over--actually is," Spreadex's Connor Campbell says. Inchcape falls 12% after the UK-based car dealership swung to a pretax loss in 1H. Bank stocks drop after the UK's Lloyds slumped to a 1H pretax loss after setting aside provisions for potential bad loans. Unsurprisingly, Airbus's second quarter results were poor, but free cash flow was flat on the quarter, which was a positive surprise, Citi says. "A350 production was trimmed from six to five [planes a month]; also not too bad considering Boeing's wide body cuts yesterday," the bank says. Shares in the European plane maker trade 5.2% higher at EUR65.40.

United States

Quarterly results from dozens of high-profile companies were due after Thursday's close, including Alphabet, Amazon.com, Apple and Facebook. U.S. stocks finished off their worst levels of the day, with the Nasdaq eking out a positive finish as investors braced for a litany of quarterly results from behemoths of the technology and e-commerce world, which could influence trade to end a choppy week. Markets were under pressure at the start of Thursday's action, prompted by the worst GDP on record in the second quarter and a labor-market report that underscores a rise in COVID-19 cases. Lack of progress in talks between congressional Democrats, Republicans and the White House on a new coronavirus aid package also weighed on sentiment. The Dow Jones Industrial Average closed 225.92 points, or 0.9%, at 26,313.65, while the S&P 500 lost 12.20 points, or 0.4%, to close at 3,246.24, but had been down by as many as 550 points at the session's nadir. The Nasdaq Composite Index, meanwhile, gained 44.87 points, or 0.4%, to end at 10,587.81 after hitting an intraday low at 10,412.09. All three benchmarks closed well off their worst levels of Thursday trade.

Asia

On Friday, the East Asian and Australian stock markets are not showing a consistent trend. While Japan and Australia are seeing a sharp drop in prices after weak data from the U.S., Chinese stock markets are holding up quite well after the official purchasing managers' index for China's manufacturing sector surprisingly rose. Technology stocks in the region are receiving a boost from the strong quarterly reports released by Apple, Amazon and Facebook on Thursday after the US close.

Bonds

Government bond yields dropped in the U.S. and Europe after fresh data on Thursday showed the worst quarterly economic contractions on record for the U.S. and Germany in the second quarter. The yield on the 10-year U.S. Treasury note settled at 0.540%, compared with 0.578% Wednesday. It was the lowest close except for one extremely volatile day in early March when the yield settled at 0.501%. In Europe, German 10-year yields dropped to minus 0.544% from minus 0.500% on Wednesday, while yields also slid on government bonds from the U.K. to Italy.

Analysis

Quirin raises Dürr target to 14 (12) EUR - Sell
IR downgrades Porsche target to 56 (59) EUR - Buy
SMC upgrades Naga to Buy (Speculative Buy) - Target 3,40 EUR
Warburg: VW cuts dividend less than feared - Buy


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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