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Global Growth Concerns Persist, Next Higher Despite Lower Outlook

Published 04/01/2019, 05:31
Updated 03/08/2021, 16:15

Stocks in Europe are lower this morning after Apple (NASDAQ:AAPL) lowered its first-quarter revenue guidance last night. The tech company warned that sales in China are slowing, and that coincided with the recent fears that China’s economy is cooling. The announcement from Apple triggered a decline in US index futures, and it hurt Asian equity markets too. In recent months there have been concerns that global growth is under threat, and the report from Apple adds weight to that argument.

Next’s shares are in demand this morning after the company lowered its full-year profit guidance, but the forecast wasn’t as bad as traders feared. The retailer blamed higher cost related to online sales and lower margins on beauty products for the lowering of the profit forecast. The high street took a hammering as in-store sales dropped by 9.2% ,but online sales jumped by 15% ,and online sales now account for the majority of group revenue. It is encouraging to see the firm is embracing the changes in the sector. The stock has been in decline since July, but if it holds above the 4,000p mark, it might retest the 5,000p area.

Ryanair confirmed that December traffic figures grew by 12% to 10.3 million, and the load factor was 95%. The stock is slightly higher today, but the wider downtrend is still intact, and a break below 1,000p, might bring 945p into sight.

Wizz Air announced a 22.7% jump in December passenger numbers to 2.7 million, and the load factor improved to 88.8% from 87.5%. The share price has been edging higher since October and if the positive move continues it might target the 3,140p region.

Burberry shares are in the red on the back of the Apple announcement, as investors are fearful the Chinese middle class might lose their appetite for Western luxury brands.

GBP/USD remains in the wider downward trend. The UK construction PMI was 52.8 – a three month low, and economists were expecting 52.9.

Apple shares will be in focus today due to disappointing update last night. Last year, the company announced it will no longer state iPhone sales numbers, it will just report the total revenue figure. That was a signal the company was worried about falling demand as they wanted to shift the focus away from unit sales. The stock reached an all-time high in October, but has been in an aggressive downtrend since then, and a break below $150.00, might bring $142.20 into play.

At 1.15pm (UK time), the US will release the latest ADP (NASDAQ:ADP) employment report and traders are expecting 178,000, which would be a slight drop from November’s 179,000.

We are expecting the Dow Jones to open 346 points lower at 23,000 and we are calling the S&P 500 down 40 points at 2,470.

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