Intriguing earnings revelations from tech giant Apple and important monetary policy shifts from the Bank of England shaped this week's financial landscape. With pivotal oil production decisions from OPEC leaders and consequential forex movements in the mix.
Curious about the details? Dive in to discover more.
Bank of England raises interest rates for the 14th time
The Bank of England announced a quarter-point increase in interest rates, bringing the main borrowing cost for commercial banks to 5.25%, the highest since February 2008, amid persistently high inflation. This marks the 14th consecutive hike since December 2021.
The decision was a split one, with the majority of the monetary policy committee voting for the quarter-point hike. The bank indicated that recent data had been mixed, but key indicators such as wage growth suggest more persistent inflationary pressures.
The Bank hinted at a potential pause in rate hikes, similar to indications from the US Federal Reserve and the European Central Bank.
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Apple sales slump continues, shares fall 2% despite exceeding sales forecasts
Despite surpassing Wall Street's sales and profit targets for the fiscal third quarter, Apple's shares fell approximately 2% as the company forecasted a possible fourth consecutive quarter of sales decline.
Although service-related profit was strong, lower-than-anticipated iPhone sales disappointed investors. While promising better iPhone sales in the fourth quarter, executives did not provide specific figures. Amidst competition with Android in a mature market and anticipation of its yet-to-be-released Vision Pro mixed-reality headset, Apple reported a 1.4% drop in fiscal third-quarter sales to $81.8 billion and a 5% increase in earnings per share to $1.26. This outperformed analyst expectations.
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Saudi Arabia extends oil production cut
Saudi Arabia, the OPEC leader, has announced an extension of its oil production cut for at least another month, potentially driving energy prices further up. The voluntary cut of one million barrels per day, first introduced in June and aimed at stabilizing and balancing oil markets, will persist through September, and may even be extended further.
Concurrently, Russia plans to reduce its oil exports by 300,000 barrels daily in September. Following these announcements, US oil prices surged 1.6% to $81.05 a barrel and Brent crude, the global benchmark, rose 1.5% to $84.50 a barrel.
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Euro has moved up but can trade below 1.10
The Euro remained steady around 1.0940 amid anticipation of key US employment data, while German economic reports showed a drop in exports and imports, and a decrease in the Producer Price Index in the Eurozone.
Concurrently, the Bank of England's interest rate hike temporarily boosted EUR/GBP, but gains were later reversed. Despite recent upward movement, the Euro could remain below 1.10 for some time due to these macroeconomic factors.
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This concludes our weekly recap. Have a great weekend and see you next week! 👋
