Global stocks gain after 'Apple's got its mojo back' with bullish forecast - while traders cheer China trade-war progress and Fed meeting
- Global stocks gained Wednesday after Apple issued a bullish revenue forecast for the current quarter and revealed signs of recovery in iPhone sales.
- Apple shares rose more than 5% in premarket trading after it forecast revenue of $52.5 billion to $54.5 billion, above analysts' expectations.
- Helping sentiment: Progress in the US-China trade war.
- Federal Reserve Chairman Jerome Powell is set to discuss the state of the US economy later on Wednesday.
- Watch Apple trade live.
Global stocks gained on Wednesday morning after Apple issued a bullish revenue forecast and revealed signs of recovery in iPhone sales, driving its shares up more than 5% in premarket trading. The optimism helped lift futures on the tech-heavy Nasdaq about 0.8%, along with other shares throughout the world.
Helping sentiment: Progress in the US-China trade war. The Financial Times reported that the Trump Administration is removing a central demand about cyber theft in a bid to shepherd a swift resolution to the conflict. Federal Reserve Chairman Jerome Powell is due to speak about the US economy at 2.00 pm in Washington.
"After the weak holiday quarter at the end of 2018, it looks like Apple's got its mojo back," said Neil Wilson, chief market analyst for Markets.com. Throughout markets on Wednesday, Wilson said, investors "chose to focus on the positives - namely a dovish Fed, apparent progress on China trade talks and a humming US economy."
Markets are closed for May holidays in countries including China, Hong Kong, South Korea, India, Singapore, and Vietnam, meaning investors were unable to buy into bullish Apple sentiment via the company's mostly Asia-based suppliers. In London, shares of Apple supplier IQE surged 6.3%.
Many major European exchanges are also shut for the May Day holiday.
Apple's bullish forecast
Apple forecast revenue of $52.5 billion to $54.5 billion for the current quarter, above analyst expectations of $52.2 billion, according to Bloomberg. The tech giant also reported that a combination of discounts, new financing offers, higher trade-in values for older phones, and lower Chinese taxes buoyed iPhone sales in the first three months of 2019.
Indeed, a 17% drop in iPhone sales pushed the tech giant's revenue down 17% to just over $31 billion in its fiscal second quarter, driving net income down 16% to around $11.6 billion. However, services revenue climbed 16% to $11.5 billion, and sales in its wearables, home, and accessories division leapt 30%.
Paid subscriptions also grew by 30 million in the quarter to 390 million, and Apple expects to pass the 500 million mark by 2020, the company said on its earnings call. Management also announced plans for a $75 billion share buyback.
Apple's revenue guidance "points to greater confidence in China and in iPhone sales generally and would at the top of the range represent a welcome return to growth," Wilson added.
All eyes on the Fed
Traders' focus will now turn to Federal Reserve Chairman Jerome Powell's press conference, said Konstantinos Anthis, head of research at ADSS.
"The US central bank will no doubt keep interest rates unchanged and will most likely send out a balanced message in regards to domestic growth, but Powell's focus may produce some fireworks," he said.
"The head of the Fed will have to discuss the bank's outlook over the state of the economy and with both bright and bleak data coming in during the recent weeks, the takeaway will be dictated by what he cares about the most."