European equities rally while the US trades slightly lower, Apple Inc. beats with US$2.33 EPS, ASX futures up 9 points
In a follow-up from yesterday's morning wrap, we'll kick off today with a debrief of Apple's (AAPL) earnings, which were released just a couple of hours ago
. The market of AAPL investors focus on many things, and arguably place more emphasis on product sales and revenues than they do earnings. Nonetheless, the key earnings per share (EPS) measure was estimated by most to come in at between US$2.15 and US$2.20 – AAPL managed to beat this with a US$2.33 EPS for the quarter ending March 31, the result of US$13.6 in net income from revenues of US$58 billion (you can see their press release here
). The company sold over 61 million iPhones for the three months. Revenue from the greater China region jumped and this area now represents AAPL's second-largest source of revenue, leapfrogging the entire European business in sales for the quarter. AAPL's revenue and EPS growth doesn't necessarily come at a crazy price – it's updated trailing price to earnings ratio is 17.96 times and it certainly passes the old Rivkin rule, "When buying shares, ask yourself, would you buy the whole company?" After-hours trade pushed AAPL to US$134.41, up from its day session close of US$132.65.
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Yesterday was a big day for two of our stocks – iiNet (IIN) and Fortescue Metals Group (FMG) led the ASX 200 for the majority of the session
. Please click here to read Shannon Rivkin's update on IIN
. From today's second chart you can see that FMG is enjoying a relief rally that comes on the back of trending iron ore prices, which have now clocked up a near-$10 rally in the last five trading days. The benchmark spot iron ore price now sits at US$59.09 after having recently traded below US$50 and spooking a lot of investors – this pushed FMG to intra-day lows of $1.75 on 13 April, but yesterday FMG closed at $2.57 and I would think that after another positive night for iron ore (+2.21%) we'll see another solid day of trade for this beaten up miner.
In today's last chart I've illustrated the AUDUSD currency pair, which is trading near the top of its recent range, coming up against selling resistance that exists at around US$0.7880. The interbank cash rate futures market still slightly favours a cut to 2.00% official interest rates in Australia next Tuesday 5 May, with futures pricing in a 57% probability of a cut. I would say that–although we're getting close to the RBA meeting–the AUDUSD pair has its commodity currency hat on at present and the lift in iron ore, copper, gold and silver prices last night will keep it well bid today.
RBA boss Glenn Stevens spoke in Sydney this morning (click here for the notes
); however, he focused on financial system reforms and did not expand upon his recent comments given in New York with regard to the Australian economy.
Upcoming economic announcements: Australian Conference Board leading index at 10am, Chinese leading index at 10am, UK GDP at 6:30pm, US consumer confidence at 12am, all Sydney time.
This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3600.