US open – Apple, COVID-19, HSBC, gold, oil

Profit Warning => Profit Taking

We’re seeing some profit taking across the markets on Tuesday, with Wall Street returning from the bank holiday weekend on a more downbeat note.

Just week’s after forecasting record revenues for the current quarter, Apple has been forced to pare back expectations as the Coronavirus has impacted both sales and production. This is likely the first of many profit warnings as the Coronavirus continues to wreak havoc in the world’s second largest economy.

Companies have varying degrees of exposure to the Chinese market but as we’ve see over the last few weeks, the disruption has been significant and widespread. Apple is the first but it certainly won’t be the last, or the most severely impacted.

While the reaction in the markets has been negative, the warning was hardly unexpected which may suggest we’re just seeing some opportunistic profit taking. There’s a huge buy the dip mentality in these markets, as we’ve seen this month already. I don’t see any reason to think this will be different.

HSBC Announces Major Restructuring

HSBC is propping up the FTSE 100 after interim CEO, Noel Quinn, unveiled the bank’s latest massive restructuring plans. The ultimate goal is to further tilt the bank towards its most profitable markets, which makes perfect sense, but comes at the cost of around 35,000 staff, huge restructuring costs and share buybacks for the next two years, which investors are less than impressed with.

Gold back in strong resistance territory

A setback is providing further support for gold, which has rallied through resistance at $1,580 to test the peak from earlier this month. We’re in serious territory now for the yellow metal, which has faced enormous resistance around these levels already this year. The risk of war in the middle east and the Coronavirus were no match for gold sellers which raises serious questions around its ability to break above here at the third time of asking.

Gold Daily Chart

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Oil slips on profit warning

The Apple warning hasn’t helped the recovery rally in oil which is seeing some profit taking of its own. This comes following a strong bounce over the last week to be fair so a little profit taking isn’t the end of the world. Traders seem a little more optimistic on the coronavirus at the moment, despite the Apple warning, which could be supportive for oil prices in the coming days and weeks.

Brent Daily Chart

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