Michael MacKenzie is currently away. Here are some highlights of today’s coverage of financial markets by Financial Times reporters.
Is Big Tech back? With Apple spending most of Tuesday eyeing one of its longest winning streaks on record, it almost looked like it, writes Peter Wells.
But markets is as markets does, and although the iPhone maker spent Tuesday morning in positive territory, setting it up for a 10th consecutive daily advance, choppy lunchtime trading dragged the stock into the red. Excluding today, Apple has chalked up only four 10-day winning streaks in its history, with the most recent being in October 2010. The only longer run is a 12-day streak that ended in May 2003. The stock’s previous nine-day winning streak was in May last year.
Apple’s gains have come in the wake of a digital services launch on March 25 when it revealed a renewed push into video, finance, news and gaming. Whether that has been the primary catalyst is up for debate. Analysts at Macquarie, who have a neutral rating and $149 target price on the stock, said there were few surprises and the newly announced products would “together generate less than 6-19% of FY21 services revenue” and at a much lower margin than its App Store, Licensing and Apple Care services.
Standard as it may be, a key driver is likely to have been the Federal Reserve, only a handful of days earlier, saying it no longer forecast rate rises in 2019. The outlook for borrowing costs has been a major driver of the broader market, and the tech sector in particular, as high-growth stocks should benefit relatively more quickly if low or steady rates fire up the economy. Read more here.
Quick Hits — What’s on the markets radar
Aramco bond orders smash $100bn —Saudi Aramco increased the amount it will raise in its first international bond sale to $12bn after drawing a record-breaking $100bn in orders, a clear sign that financial markets are willing to draw a line under last year’s killing of journalist Jamal Khashoggi, write Robert Smith, Simeon Kerr and Joe Rennison.
The $100bn in orders far exceeds previous highs for emerging market borrowers, outstripping even the $67bn of demand Saudi Arabia itself saw in its 2016 government bond market debut.
Anthony Simond, an investment manager at Aberdeen Standard Investments, attributed the interest to a “one-of-a-kind emerging markets deal”, which had drawn strong demand from large US fund managers that typically invested in highly rated corporate bonds. Read more here.
IMF cuts global growth forecast — The global economy has slowed sharply since last summer and will rely on a “precarious” boost from a few emerging markets to reverse the loss of momentum, the IMF has predicted in its latest economic forecast, writes Chris Giles.
Cutting its outlook for 2019 and 2020, the fund judged that advanced economies would “continue to slow gradually” into next year while emerging economies would play a more positive role, led by an end to crisis conditions in Turkey and Argentina and stabilisation in the all-important Chinese growth rate.
Gita Gopinath, IMF chief economist, said it was “a delicate moment for the global economy”. “While a global recession is not in the baseline projections, there are many downside risks,” she said.
Read more here.
City alarm at post-Brexit equity trading — Fund managers holding European equities are praying that a no-deal Brexit is avoided this week, writes Philip Stafford.
Europe operates the world’s most integrated cross-border share trading marketplace but the UK’s possible sudden departure from the EU would cleave this network into two: EU and non-EU markets.
Fund managers on both sides of the Channel are alarmed. Efama, a trade lobby group, warned the European Commission a split would cost on average €165m per EU27 fund every year. Underlining the City of London’s heft, Efama also estimated the average fund manager would take at least 240 days to unload a holding of AstraZeneca shares in the EU, compared to a maximum 37 in the UK capital.
But these statistics do not even touch on the biggest problem — the daily closing auction. Portfolios worth billions of euros are benchmarked to the final prices set in auction on national exchanges. It accounts for nearly a fifth of daily business. Without cross-border access, asset managers would be shut out and the UK more affected. Read more here.
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