Must read: oil stocks, US earnings, Apple

GLOBAL MARKETS

Most European indices have bucked the negativity overnight in Asia to open higher with the DAX, CAC and FTSE MIB in the green, However, the FTSE 100 is lagging its European rivals, dragged down by oil majors like BP (LSE:BP.) and Shell (LSE:SHEL) which are taking a hit on lower underlying oil prices. 

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In the US, after shares in JPMorgan Chase & Co (NYSE:JPM) fell sharply on Friday on the back of a lower 2024 net interest income forecast, all eyes are on The Goldman Sachs Group Inc (NYSE:GS) which continues financial stocks’ earnings season later today.

OIL 

There has been a negative reaction from the oil market to Iran’s retaliatory attack on Iran over the weekend, partly because a lot of the geopolitical risk was already priced in last week after oil hit six-month highs. Plus, risk-off sentiment gripped markets overnight with a sea of red across Asia-Pacific markets. And Israel’s government said the damage was limited. 

Having already gained around 18% so far in 2024, there are growing concerns that Brent crude could surge past $100 a barrel. Money managers have been upping their long positions on US crude futures and options lately in anticipation of a possible threat to supply. There are worries about disruptions through the Strait of Hormuz in particular which sees around 20% of global oil pass through the waterway. 

One of the biggest risks for the UK economy from $100 oil is that it could push inflation higher again. The Bank of England and the government have been desperately trying to depress price pressures since the end of the pandemic because they were largely responsible for the cost-of-living crisis. Higher oil has the potential to push up prices across various parts of the economy again, not just in terms of petrol pump prices, but also in other industries like transportation, manufacturing, and food production.

APPLE 

According to research from IDC, Apple Inc (NASDAQ:AAPL) suffered a 10% slide in smartphone shipments in the first quarter. That means Samsung has now overtaken the iPhone maker to become the world’s leading smartphone maker with 20.8% market share.

The two tech giants have been jostling for the number one spot after Apple overtook Samsung in the final quarter of 2023 but its market share has since slipped back to 17.3% market share. In contrast to Apple’s sales slowdown, Samsung has enjoyed strong smartphone revenues this quarter partly thanks to the release of the Galaxy S24 at the end of January which received a positive reception. 

Unlike some other US tech behemoths, Apple shares have struggled this year, shedding nearly 5% year-to-date until Friday’s close. With Apple among the stocks suffering within the so-called ‘Magnificent Seven’, some are now rebranding the outperformers into a more exclusive club known as the ‘Fab Four’. Unfortunately for Apple, it is one of the names that hasn’t made the cut. 

A lot of this year’s tech outperformance has been driven by the hype around artificial intelligence, a major market theme that Apple has been relatively quiet about, explaining part of the reason why shares have been falling behind the pack. Last Thursday, however, Apple offered its investors a glimmer of hope by signalling plans for a new AI-focused Mac computer line.

With Apple trading at a discount to its valuation last year, some investors see this as a rare opportunity to snap up shares in the tech giant while they are on sale, which may well not last.