The second quarter reporting season had been going reasonably well.
Granted, there were some bumps in the road and the earnings recession looks likely to have played out as expected.
Nonetheless, the bonus of a largely expected Federal Reserve rate cut, a low and stable unemployment rate and non-farm payrolls which were bang in line with expectations, all helped lighten the mood.
Sector-wise, the healthcare sector held up reasonably well, while the banks were generally positive. Boeing was inevitably under pressure, as were semiconductors and tech hardware. Software was rather more promising, although not immune to a downturn – but more of that later.
Within tech, Apple (NASDAQ:AAPL) seems to have regained some of its former glory with numbers which broadly exceeded analyst expectations.
Apart from devices, the company is mostly focused on its Apple Music streaming service, Apple Pay contactless payments and selling music tracks and mobile apps on the iTunes Store.
Overall, both revenues and earnings per share metrics surpassed forecasts. Sales from its increasingly important Services business, which includes music streaming and app sales, rose by just under 13%.
A base of over 1.4 billion active devices has allowed its Services business, which includes Apple music, to blossom. Services accounted for just over one-fifth of third-quarter sales.
As expected, iPhone sales declined, falling by just under 12%, although less than the 17% recorded the previous quarter.
Geographically, sales in the Americas, including its home US market, rose by 2%, although sales for both Europe and Greater China retreated 1.8% and 4.1% respectively.
For investors, concerns over what might take up the slack from the current tailing-off of iPhone device sales persists. A trade war between the US and China, a key market place, is also unhelpful.
More favourably, the group's cash balance and recent change towards funnelling cash back to shareholders offers a positive catalyst. So does impressive gross margin, which demonstrates Apple does not have to cut prices to keep growing.
The shares remain well-regarded on the street and, despite having dropped by nearly 6% over the last calendar year, have risen some 25% in the year to date.
Yet the earnings season overall was hit by something of a bolt from the blue from President Trump, who surprised the market by ratchetting up the trade war with China by announcing further tariffs, thus overshadowing any progress that Corporate America was making.
Effective 1st September, he announced further tariffs of 10% on another $300 billion of Chinese goods, taking the trade war to another level.
Not necessarily having the ability to do the same on US goods, China allowed its currency to weaken further in what the US Treasury – probably misguidedly – described as currency manipulation.
Whatever the whys and wherefores, the market realised that not only was the frosty rhetoric turning into hard, economic action, but the very real prospects of bringing on a global recession resounded around markets worldwide.
Some poise has since been recovered, although the likelihood of conciliatory short-term progress between the two powers seems remote.
Markets remain in positive territory for the year, but compared to last week, the magnitude of the jitters is evident.
The Dow Jones Industrial Average, for example, is ahead by 12% in the year to date, although just a week ago the figure was 17%. The S&P 500 is up 15%, a week ago 20% and the Nasdaq 18%, a week ago 25%.
The latest escalation has revealed the fragility of sentiment in markets at the moment. In the US in particular, thought to be nearing the end of the economic cycle, further interest rate cuts are being priced in by the market, although the Fed's rhetoric does not necessarily support that view at the moment.
If a positive catalyst is required for investors at present, it seems less and less likely that it will be coming from the White House.
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