Morning Bid: Markets hope for relief in Apple margins

Markets Await Apple Earnings Margins for Relief Amid Volatile Week

Market Overview and Key Drivers

A look at the day ahead in European and global markets from Wayne Cole.

Asia Market Sentiment and Apple Earnings Anticipation

It's been a calmer start in Asia as Nasdaq futures bounce modestly after last week's drubbing and oil prices ease. It could be investors are hoping for some earnings relief from Apple later today given it isn't spending mountains of cash on data centres.

Apple Earnings Forecasts and Margins

Analysts forecast revenue of around $113 billion, up 11% on the year before, with earnings per share at $2.00. One focus will be profit margins, given the company is facing rising costs for equipment, particularly chips and memory. Gross margins are seen between 47% and 48%, which would be astounding for any other company.

iPhone 18 Sales and Apple Share Performance

Investors will also be hungry for guidance on how iPhone 18 sales are going with pre-orders having begun in mid-October. Apple's shares have been something of a haven of stability having risen for four straight months and are up 27% so far this year, pushing its valuation past $5 trillion.

Other Earnings and Political Factors

More challenging for the mood will be results from AMD later in the week given it slid almost 11% last Friday as Intel shed 28% on a disappointing outlook.

The US midterms are an added wrinkle as a Democratic win could result in more political opposition to data centres and calls for controls on AI in general.

Political Uncertainty and Market Implications

Prediction markets have the Democrats winning the house, but are less certain on the Senate where there are some very close calls. There is likely to be a bitter fight over spending authority and raising the debt limit, with government borrowing in the frame as Treasury announces its quarterly refunding this week.

Oil Prices and Geopolitical Tensions

While oil prices are down almost 3% so far today, it isn't entirely clear why. Talks are continuing between Iranian and Qatari mediators, but that hasn't stopped tankers being attacked in the Gulf.

There are also plenty of reports the US has been telling allies in the Middle East to expect a renewed strike on Iran once the midterms are over. That may be why Brent futures are still above $100 a barrel out to April.

Key Events to Watch

Key developments that could influence markets on Monday:

- German retail sales for September, EU PMIs for October, US ISM for October and construction spending for September

- Appearances by ECB Vice-President Boris Vujcic, ECB policymakers Jose Luis Escriva and Olivier Moulin, Bank of Spain governor Jose Luis Escriva and Bank of France governor Emmanuel Moulin

- Federal Reserve Bank of Chicago President Austan Goolsbee moderates a discussion

(Editing by Jacqueline Wong)