Market Outlook – April 25, 2018

U.S. Bond Yields Trigger Market Selloff

 

U.S. stocks moved notably lower as many traders have been intently focused on the 10-year Treasury note whose yield has climbed the 3% mark. At the end of the trading session on Tuesday, the Dow Jones Industrial Average was down by 425 points, the Nasdaq Composite Index was lower by 121 points and the broader S&P 500 Index was off by 36 points.

Market breadth was obviously negative, with losers ahead of advancers by a wide margin on the NYSE. The industrial and technology issues suffered steep losses while the telecom and utility stocks managed to overcome the downtrend.

The annualized rate of 694,000, representing the New Home Sales figures for March, was a solid reading. Meanwhile, the 128.7 Consumer Confidence Index for the month of April as reported by Conference Board which was higher than had been anticipated.

Western Banks Seeks Clarification on China’s New JV Rules

 

Global banks are seeking clarification from China Securities Regulatory Commission (CSRC) regarding the draft rules on foreign ownership. The country’s securities watchdog released them for consultation last month.

The banks expressed their concerns on the net asset value (NAV) rule and limits to ownership by non-financial investors. Once allowed to take over their onshore securities ventures, asset value requirements might be increased and more limitations added. China made a pledge to ease foreign ownership and joint ventures are essential parts of the plan. The draft rules could have an opposite effect instead of broadening participation.

Apple’s CEO to Meet with Trump

 

U.S. President Donald Trump will meet with Apple Inc.’s (AAPL) CEO Tim Cook in Washington, D.C. on Wednesday. The meeting is part of Trump’s official schedule at the White House but the meeting is off limits to the press.

There was no indication of the private meeting’s agenda. Possible topics of discussion would be the trade tensions between the U.S. and China which has extended to the technology sector.

Because China is a key market for Apple, investors are worried that it might affect the world’s largest tech company which is due to present its earnings report in early May.

STMicroelectronics Sees Higher Demand for Smartphones

 

On Wednesday, the Franco-Italian chipmaker STMicroelectronics made an upbeat assessment that by the second-half of this year, the demand for its smartphones-focused products would perk up significantly. STM clients range from carmakers to industrial groups and makers of new connected devices.

The company project sales to grow in the first half and eventually offset the seasonal smartphone dip in the first three months of the year. The forecast could brush off investor anxiety over the slow takeoff of Apple’s iPhone X.

STM’s forecast is contrary to the outlook of South Korean chipmaker SK Hynix Inc. The Asian company warned of a slower growth in smartphone chip sales on Tuesday.  Apple’s supplier, Taiwan Semiconductor Manufacturing and European rival AMS earlier predicted a downturn due to weak orders.

Google Unveils Redesigned Gmail

 

Google’s parent company Alphabet Inc. (GOOGL) unveiled its redesigned Gmail on Wednesday.  This is the latest overhaul of Gmail since 2013 and it took two years to complete the costly update. Alphabet improved the security and offline functionality to better resemble Microsoft Corp.’s (MFST) Outlook.

Google’s objective is to draw away business from Microsoft. They can achieve that goal with this most extensive software update in its G Suite workplace bundle. Microsoft’s Office workplace software suite continues to dominate.

Jacob Bank, product manager lead for Gmail, said, “This is an entire rewrite of our flagship, most-used product.” About 1.4 billion people use Gmail monthly. It’s a long way off before Gmail catches up. Outlook is generating ten times more the $2 billion annual revenue of Gmail.

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