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If investors were concerned about slowing growth in the euro area, the performance of European stocks in July would appear to suggest that they aren’t losing too much sleep over it.

In a month where we’ve had to deal with concerns about trade war escalations on two fronts, along with rising tension between the US and Iran, risk appetite doesn’t look particularly diminished. In fact, US oil prices finished the month lower, posting its biggest monthly decline in two years.

Yesterday’s positive finish was largely driven by reports that the US and China were looking at finding ways to restart trade talks, which have been stalled for a few weeks now.

While the gains in Europe were fairly modest, US markets also recovered some of their mojo on these reports, with the Nasdaq also rebounding ahead of an eagerly awaited Q3 earnings report from Apple, with some in the investment community hoping that a decent number here will somehow put a band aid on some of the leakage we’ve seen over the past two weeks in the tech sector.

This seems highly unlikely in the longer term given how different Apple is to its so-called FANG peers, in that it’s a hardware as well as a services company. Last night’s Q3 numbers reinforced that with profits coming in at $2.34c a share with revenues of $53.3bn, both beating expectations, and the company’s best third quarter ever.

The number of handsets sold missed expectations coming in at 41.3m, while the average price sold also fell slightly from $728 to $724. On the growing services division, revenues rose to $9.55bn, a rise of 31%, while revenue guidance for Q4 was also revised up to $60-62bn.

More notable is that the company returned nearly $25bn to investors through its capital return program, another reason why Apple is unique in the tech sector and will likely remain insulated in the event of any further tech sector weakness.

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.

In the UK the manufacturing sector is expected to come in slightly softer at 54.2, down from 54.4, still a decent and consistent number, and unlikely to alter perceptions about a possible Bank of England rate rise tomorrow.

The Federal Reserve is also gearing up for its latest monthly meeting ahead of what is likely to be another rate rise at its September rate meeting. No surprises are expected, with the US labour market continuing to look strong, with today’s ADP report expected to show 186k new jobs added in July.

Today’s Fed statement isn’t expected to differ too much from the previous one, with any changes likely to be minor in nature in terms of possible changing inflation expectations along with any new references to risks about rising trade tensions.

EURUSD – failed at the trend line resistance at 1.1750 yesterday, drifting lower again. While we remain below here the risk remains for a move lower, through 1.1620 towards 1.1500. If we do get a move through 1.1760 we could well see 1.1850, with support at 1.1620.

GBPUSD – continues to find support above the 1.3070 area as it tries to move higher, running out of steam at the 1.3173 area yesterday. The next target remains at the 1.3220 area while above 1.3070, on the back of the bullish reversal off the July lows. Below 1.3070 retargets 1.2960.

EURGBP – spiked up to 0.8938 before drifting back. The big resistance remains up at the 0.8970 area, and while below still prefer a move back towards last week’s lows at 0.8860/70.

USDJPY – having stayed above the 50-day MA at 110.50 we’ve headed higher and the move above the 111.70 area has the potential to retarget the 112.20 area, as well as the previous peaks at 113.20.

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