Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Will Apple become the first company in history to be valued at $1tn? The company reported better than expected results after the market closed on Tuesday, helped by strong sales of the higher-cost iPhone X profits jumped 32%, and its shares rose 4% in the after-market, putting it tantalisingly close to the magic $1tn figure. Jasper Lawler, head of research at London Capital Group, said:
Traders breathed a sigh of relief as Apple reported strong earnings after the close, putting a spark back into the Nasdaq…
What was there not to like about these numbers? This was the news that the markets had been hoping for; there had been concerns going into this release that the iPhone X numbers just weren’t going to stack up, but that wasn’t the case and Apple has managed to pull it out of the bag again, proving why it should be the first trillion-dollar company. The final 7% lift in the share price required to hit that trillion-dollar level shouldn’t be so tough achieve after a set of figures like that.
Here is our report on the Apple numbers:
Elsewhere it is another big day for company results, with Lloyds Banking Group reporting a 23% rise in pre-tax profit and Next defying the current retail blues with a 2.8% increase in second quarter full-price sales, helped by the warm weather boosting demand for summer outfits.
We will also get the first snapshot of how the manufacturing sector has performed in July, with PMI figures from the UK, Europe and US. China has already reported, with its manufacturing sector growing at the slowest pace in eight months, with exports declining amid trade tensions. The Caixin/Markit PMI fell from 51 in June to 50.8 last month.
The UK numbers are also expected to see a slight dip, from 54.4 to 54.2. But any figure above 50 shows expansion, and the decline is unlikely to deter the Bank of England if it really wants to raise interest rates on Thursday. As for Europe, Michael Hewson, chief market analyst at CMC Markets, said:
It’s also set to be another important day for economic data especially in light of yesterday’s disappointing EU Q2 GDP numbers which came in unexpectedly lower than anticipated. For most of this year we’ve been told that the slowdown that we saw in Q1 was going to be temporary, and likely weather related. The weak Q2 French GDP numbers and yesterday’s weaker than expected EU numbers would appear to give the lie to that perception, and more worryingly inflation appears to be showing signs of picking up.
This is likely to be a concern for the European Central Bank especially if we see no evidence that Q3 is gearing to pick up the slack, with today’s July manufacturing PMI’s taking on a much greater importance in terms of looking for a rebound in economic activity after the weaker readings we’ve seen so far this year.
Early indications aren’t particularly encouraging if last week’s flash numbers from Germany and France are any guide though Germany did show some improvement, which should be confirmed at 57.3. France slowed to 53.1, while Spain and Italy are also expected to do the same, coming in at 53.1 and 53 respectively, both lower than their June readings.
Much later the US Federal Reserve will announce its latest rate decision, although no change is expected this month, with an increase more likely in September.
Markets remain edgy, especially with the latest reports suggesting an escalation in the current trade tensions. The US is said to be considering increasing its 10% tariffs on $200bn worth of Chinese imports to 25%.
8.50 BST French manufacturing PMI
8.55 BST German manufacturing PMI
9.00 BST Eurozone manufacturing PMI
9.30 BST UK manufacturing PMI
13.15 BST US employment figures from ADP
14.45 BST US manufacturing PMI