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Good morning. The new iPhone range was announced, the Brexit deal deadline is tomorrow and another Covid-19 drug hit a snag. Here’s what’s moving markets.
Apple Inc. unveiled its latest range of iPhones, a product line that Wall Street reckons is about to kick off a new cycle of sales growth for the world’s largest technology company. At a virtual event, the firm showed off the 5G iPhone 12 in several colours, with a 6.1-inch screen and edges that are flat instead of curved. They start at $799. Apple shares slipped 2.7%, though, giving up some big gains from Monday. The company also announced a cheaper and smaller version of its HomePod smart speaker, in a bid to expand in a market where it has struggled.
The blame game continues ahead of tomorrow’s big Brexit deal deadline as the U.K. and European Union have so far failed to reach a compromise. The bloc’s chief negotiator, Michel Barnier, said the talks haven’t sufficiently advanced for them to enter the intensive final phase, according to officials, while a spokesman for British Prime Minister Boris Johnson maintained the U.K. is “ready and willing” to leave the single market without a deal. Johnson’s facing pressure on the domestic front, too, with opposition leader Keir Starmer calling for a “circuit breaker” lockdown in England to slow the spread of Covid-19. Johnson was reported to have cracked a joke about avoiding in-laws at Christmas on private call with Conservative lawmakers.
Progress on coronavirus treatments hit another stumbling block as Eli Lilly & Co. said enrolment of participants in a clinical trial of its antibody therapy had been paused due to a potential safety concern. The firm is one of several companies developing so-called monoclonal antibody therapies, which can potentially aid those with early symptoms from developing severe cases. They’re seen by pharmaceutical executives and government health officials as a viable bridge to a vaccine. The news followed Johnson & Johnson’s decision to pause its vaccine trial because of a sick volunteer.
Prospects for U.S. fiscal stimulus before next month’s election dimmed as House Speaker Nancy Pelosi demanded the White House revamp its latest offer and Senate Republican leader Mitch McConnell pushed a smaller-scale strategy that Pelosi quickly rejected. McConnell’s proposal to vote next week on just one provision appeared to stoke opposition even from President Donald Trump, who tweeted “Go big or go home!!” The S&P 500 index fell for the first day in five on Tuesday, but futures in the U.S. and Europe are pointing higher this morning.
Goldman Sachs Group Inc. and Bank of America Corp. are next up in U.S. banking earnings after somewhat upbeat updates from JPMorgan Chase & Co. and Citigroup Inc. In this region, reports from Just Eat Takeaway and chip equipment group ASML Holding N.V. are in focus. Elsewhere, the board of L’Oreal SA is meeting today to announce its choice to designate Nicolas Hieronimus as its new chief executive, Le Figaro reports. European Central Bank Chief Economist Philip Lane and Bank of England Chief Economist Andy Haldane are among speakers at various events, while in data we’ll get euro area industrial production numbers.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
And finally, here’s what Cormac Mullen is interested in this morning
The good news is analysts are going into the just kicked-off global results season in a more positive frame of mind, the bad news is that could mean the positivity is already in the price. Citigroup’s global earnings revisions index — a gauge of profit upgrades minus downgrades — has recovered from a recent dip and is back near its highest in over two years. The gauge has a close relationship with global equities and suggests a continued march higher is needed to boost stocks. And it may come. As my colleague Vildana Hajric pointed out Tuesday, an unprecedented share of companies are now predicting a brighter future. The ratio of companies saying analyst earnings estimates are too low is 3.3 times higher than those saying they’re too high — a record — according to Bank of America data going back to 2000. But as traders in JPMorgan and Citigroup found out overnight — better-than-expected earnings weren’t enough to push those stocks higher, as investors worried that they signaled just a pause in pain. It’s way too early to bet on this becoming a common theme. But it’s an interesting dynamic to watch as the third quarter earnings season gets underway in earnest.
Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo.
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