Apple Prepares For Bruising While Hot UK Jobs Market Shows Little Sign Of Cooling Off

Apple Prepares For Bruising

“When a tech giant like Apple Inc (NASDAQ:AAPL) starts to prepare for a bruising, as the winds of a recession whip up, it causes a chill for valuations across a forest of stocks. Even though the company is still preparing for fruitful product launches, reports that it’ll start slowing hirings in some divisions saw Wall Street give up gains as investors fretted that other companies may also start battening down the hatches. As worries of recession surfaced, the S&P 500 and tech heavy Nasdaq fell back negative territory, closing down 0.8%.

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A darkening picture also emerged from Goldman Sach results, with the investment bank taking steps to insulate itself from stormy weather by slowing hiring and cutting costs. But there was relief that the 48% drop in quarterly profits wasn’t quite as steep as expected, due to gains in bonds and commodities trading.

China is finding it hard to turn the page on its Covid story to reach a more positive chapter, with cities bracing for fresh lockdowns. Infections with a new strain of Omicron are spreading fast, with 20 million residents in Shanghai set to be tested this week. Tourists are stranded in the coastal city of Beihai while the world’s biggest gambling hub, Macau, remains in lockdown. Beijing shows little sign of changing direction from its uncompromising zero-Covid strategy, holding back recovery for the world’s second largest economy.

There had been hopes supply chain snarl ups which have added to inflationary pressures would have eased, but instead shortages of key components like computer chips are set to linger. The FTSE 100 has opened lower with mining stocks on the back foot as worries about demand for commodities amid a global downturn ratchet up.

There are no cooler breezes rippling through the UK labour force just yet with the jobs market still red-hot and the fight for talent raging. The unemployment rate is holding steady at 3.8% while more people have piled back into work in search of higher incomes to withstand the cost-of-living crisis. With the rate of wage growth, excluding bonuses, edging up again, the trend is likely to add to expectations that the Bank of England won’t hold off raising interest rates, and that policymakers will vote for a 0.5% rise at the August meeting to try and push down demand, and prices across the economy.

WISE Gets A Running Start

Payments firm WISE has got off to a running start with investors cheering trackside as the company sprints towards beating its target of 30% revenue growth for the full year. The company has been caught up in the global tech sell-off but has also been languishing under a cloud following the big HMRC fine levied on the boss Kristo Kaarmann, for failing to comply with tax rules. The investigation by the FCA into his conduct and the regulatory obligations and standards he needs to meet may still be casting a shadow over these numbers, but the company’s prowess in attracting a surge in customers sending money across borders has come to the fore.

As the cost-of-living crisis develops, people are trying to find little savings everywhere and WISE’s competitive strategy on fees is bearing fruit. The challenge will be to maintain its profitability and low fees while it also invests in infrastructure and security features, to increase the ratio of instant payments which are part of its successful formula."

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

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