US equities rebounded mildly as Beijing and Washington were reported to have returned to the negotiation table to avoid a full-blown trade war, although the talks are still at preliminary stage and the outlook for trades is full of uncertainty.

Meanwhile, Mr Trump is considering to hike tariff rate from 10% to 25% on US$200 billion Chinese imports, and this will likely make the negotiation more difficult.

Apple’s 3Q earnings smashed analysts’ forecast with 40 percent Earnings Per Share (EPS) growth and 17 percent jump in its revenue on y-o-y basis. Its EPS of US$2.34 is higher than Reuters’ consensus estimate of US$2.18. Higher revenue and profits are mainly attributed to higher average selling price (ASP), which is now at US$724 due to the introduction of iPhone X. Apple’s share price is traded 4% higher in the after-hour market to US$198 area.

In the FOMC announcement tonight, the Fed is widely expected to stay put on interest rate decision and the likelihood of any significant change in its policy guidance is low. In view of strong US GDP readings in the second quarter, robust job market and steadily firming inflation, the central bank has more reasons to raise interest rate gradually. Another two quarter-percentage hikes in September and December are likely to be on the table.

China’s manufacturing PMI fell from 51.5 in June to 51.2 in July. This number is below consensus forecast of 51.3. Weaker-than-expected PMI readings re-affirmed a slowing economy due to weaker exports and internal deleveraging campaign. This also raises concerns of more downside pressure as trade tensions ramped up in the past few months. The policymakers are placing higher scrunity into economic development and pledged to support growth with fiscal stimulus and dovish-biased monetary policy. The stock market performance, however, remained sluggish as the marginal effect of monetary easing is diminishing.

Oil traders are eyeing the US DoE crude oilinventory report tonight to assess the latest demand-supply relationship. According to Reuters, markets foresee some US$3.15 million decline in the commercial crude inventory.

Crude Oil Stocks (Net Change)

By Margaret Yang in Singapore

 

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