Apple earnings and Brexit Vote to keep traders engaged

With just a handful of stocks in negative territory traders dived into the FTSE ahead of the Commons vote this evening. The FTSE quickly rallied to 6850 and has steadily moved sideways since. Defensives were the order of the day as investors sought the relative safety of tobacco stocks and utilities amid US – Sino trade tensions and ahead of the Brexit vote in the commons at 7pm GMT.

US – Sino trade rift took another turn as the US Justice department charged Huawei with conspiring to steal trade secrets from US T Mobile Inc. Given that European bourses are trading higher and the Dow has kicked off on the front foot, it is fair to say that the markets have taken the news in their stride. 

Earnings are coming through thick and fast this week. Industrial firm 3M advanced after reporting profits, which tech stocks declined ahead of Apple’s numbers after the bell this evening. 

Apple is expected to report earnings of $4.17 per share on revenue of $84.1 billion in revenue. Apple is prone to big moves after reporting earnings, either gapping higher or lower depending whether the numbers impress or disappoint. The whisper number is $4.25 so we could be in for some well needed good news for the iPhone maker.

What next for Brexit?
Sterling spiked higher after Commons speaker John Bercow chose two key amendments for debate and vote. First the Brady amendment to replace the Irish backstop and secondly the Cooper amendment which looks to delay Brexit in order to secure a better deal. These are among a total of 6 amendments that will be debated and voted on. 

As Theresa May finally tears up her Brexit plan, pound traders are reading into the direction of the political maneuvering and see a decreasing possibility of a no deal Brexit. As a result, the pound bounded northwards, peaking at $1.32. This afternoons’ spike has given us a taste of what’s to come this evening. We expect more volatility heading towards the voting at 7pm. The pound is not contemplating a no deal Brexit at these levels 

Yet today is just a stepping stone on the way to further Brexit debate and discussion, therefore any pound reaction could be limited. It is all well and good that Theresa May wants to go charging back to Brussels demanding to renegotiate the Irish backstop. But what if they say no? Brussels have been very clear that there is no room for further negotiation.