Five Things You Need to Know to Start Your Day
Twitter to cut jobs, Apple to report earnings, the Fed to tighten more depending on who gets into the White House — and what’s going on with the yuan? Here are some of the things people in markets are talking about today.
Big day in tech
Apple Inc. is likely to report its first annual drop in revenue since 2001 when the company releases earnings after the bell this evening, according to analysts’ estimates. Investors will be particularly focused on Apple’s performance in China, where competition from local manufacturers has been increasing. Meanwhile, Twitter Inc.’s woes continue, with the company said to be planning to cut as much as 8 percent of its workforce, according to people familiar with the matter. An announcement on the cuts could come before Twitter releases earnings on Thursday.
The U.S. Federal Reserve is inclined to raise interest rates higher than would otherwise be the case if the next president pursues an expansionary fiscal policy. Speaking yesterday evening, Federal Reserve Bank of Chicago President Charles Evans said that the Fed should be more explicit about how policy makers would respond to new information on the economy. Market-implied odds of a rate increase by the central bank in 2016 were at 71 percent this morning.
The offshore yuan dropped to an intraday low of 6.7885 to the U.S. dollar, or the weakest level in data going back to 2010, before recovering to trade broadly unchanged for the session. Having seemingly abandoned its previous 6.7 ‘line in the sand,’ investors now expect the People’s Bank of China to step in only if the depreciation of the currency becomes disorderly. The weakness of the yuan is said to be fueling buying of bitcoin, which has risen to its highest level in three months.
U.K. poll backs May
Britons are more concerned about controlling immigration than maintaining access to the European Union, according to a survey published this morning, suggesting support for Prime Minister Theresa May’s position on Brexit. Meanwhile, Bank of England Governor Mark Carney is due to face questions in the House of Lords on the economic consequences of the referendum, which will be watched closely by traders as to hints of future policy, as well as the governor’s intentions for his own future.
Markets creep higher
Overnight, the MSCI Asia Pacific Index advanced 0.4 percent, while Japan’s Topix index added 0.7 percent to climb to the highest level since May as the yen weakened against the U.S. dollar, boosting the outlook for exporter earnings. In Europe, the Stoxx 600 Index was 0.1 percent higher at 6:13 a.m. ET as a drop in bank shares was offset by a rise in miners. S&P 500 futures added 0.1 percent.