Equities report: US stock markets on the edge

US stock markets appear to be recovering this week, following last week’s sharp decline. Market worries for the US seemingly intensified following the release of the US employment data on Friday. In the European markets, we note that Volkswagen’s woes appear to be ongoing, whilst on the side the ECJ ruled against Google (#GOOGL) and Apple (#AAPL) in their respective cases. We are to conclude the report with a technical analysis of the US100’s daily chart.     

US August employment data

We highlight the release of the US employment report for August last Friday, which appears to have had ripple effects in the US stockmarkets. In particular, the non-farm payrolls figure was expected to rise and reach 160k, yet came in lower at 142k. Moreover, last month’s non-farm-payrolls figure was revised lower to 89k, which may have sparked worries about the true resiliency of the US labour market. Yet the unemployment rate ticked down to 4.2% as was expected and was lower than last month’s rate of 4.3% which may have investors worried about a potential overtightening scenario, as pressure on the Fed to cut interest rates aggressively appears to have decreased. Overall, the data implied some loosening in the labour market, yet the confirmation of the unemployment rate coming in at 4.2% appears to have reduced the market’s expectations of a 50-basis point cut by the Fed in their next meeting. In turn, this may have weighed on US stock markets, as there may be less pressure on the Fed to aggressively cut interest rates for the rest of the year.

A busy Tuesday for the ECJ

The European Court of Justice ruled against Apple on Tuesday, in regards to a decision by the European Commission in 2016 which claimed that the company received unlawful state aid from Ireland. In turn the ECJ’s ruling which is final will result in Apple having to pay a $14.4 billion dollar tax bill due to the company receiving “illegal tax benefits” from Ireland. Moreover, the ECJ also dismissed an appeal lodged by Google and its parent company Alphabet against the company’s €2.4 billion fine by the EU Commission in 2016 which claimed that Google (#GOOG) abused its dominant position in online search by favouring its own price comparison shopping service over those of competitors. Overall, the two rulings against Apple and Google in their cases could weigh on each company’s respective stock price.

Apple’s event

In other news, Apple had “it’s Glowtime” event on the 9  of September, where the company debuted the first generative AI iPhone. In the event, the company announced its Apple Intelligence software and showcased longer-lasting batteries. However, the main issue that we would like to point out is that Apple intelligence will not be available in Europe, at least in the beginning due to issues with the Eurozone’s digital markets  act. Furthermore, per Reuters, Apple has failed to find a partner in China to help power its AI ambitions. In conclusion, the apparent hurdles for Apple Intelligence to launch worldwide could reduce the Apple’s sales of its iPhone which according to Bloomberg accounted for 51.5% of the company’s sales in the past four quarters. Thus, in our view should Apple fail to implement a worldwide rollout of its Apple intelligence, it could hurt the company’s sales and thus may weigh on their stock price in the future.

Volkswagen’s CEO points to increased competition in Europe.

As a reminder,  Volkswagen announced last week that it is considering closing plants in Germany for the first time in its 83 year history, which was then followed by a public outcry. Thus, with pressure mounting from IG Metal, the largest and strongest industrial union in Europe, Volkswagen’s CEO has been forced to publicly defend his cost-cutting measures. In particular, Volkswagen’s CEO Blume stated per Reuters in an interview on Sunday, that “the pie has become smaller,and we have more guests at the table”. Moreover, the CEO went on to say that “Fewer cars are being sold in Europe”, essentially implying that the possible closure of factories in Germany could be a part of cost-saving measures for the group. Nonetheless, the implications of a showdown between Volkswagen’s management and IG Metal could spell disaster for the company’s stock price

تجزیه و تحلیل فنی

نمودار چهار ساعته شاخص سهام نزدک

• Support: 17900 (S1), 17000 (S2), 16000 (S3)
• Resistance: 18830 (R1), 19500 (R2), 20200 (R3)

The US100 appears to be currently testing our 18830 (R1) resistance line, yet we maintain our bearish outlook for the index and supporting our case is the RSI indicator below our chart which currently registers a figure near 40, implying a bearish market sentiment. Moreover, we would like to point out the downwards-moving trendline which was incepted on the 22  of August. For our bearish outlook to continue, we would require a break below the 17900 (S1) support line with the next possible target for the bears being the 17000 (S2) support level. On the flip side for a bullish outlook, we would require a clear break above the 18830 (R1) resistance line with the next possible target for the bulls being the 19500 (R2) resistance level. Lastly, for a sideways bias we would require the index to remain confined between the 17900 (S1) support line and the 18830 (R1) resistance level.

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