Equities: Tech losses mask broader market resilience - Deutsche Bank

Jim Reid's Macro Strategy note highlights a sharp reversal in US equities, as the S&P 500 erased early gains to close 0.51% lower. Despite technology-sector weakness pushing the Nasdaq 100 into correction territory, broader market participation remained resilient, while Apple's cautious margin outlook weighed on sentiment.

Equities show resilience despite tech sell-off

"Meanwhile, the rally in US equities proved short-lived as chipmaker sentiment deteriorated over the course of the session. Early on, the S&P 500 had traded +1.08% higher, supported by easing geopolitical fears as well as a strong ISM manufacturing print."

"However, the tech mood then soured, led by a continued slump in the Philly semiconductor index (-3.37%), which also pulled the Nasdaq 100 (-1.39%) down into technical correction territory, with a -10.36% decline from its October 6 peak."

"By contrast, the equal-weighted S&P 500 rose +0.73%, as more than two thirds of the index advanced. So that continued the pattern we noted in our October performance review yesterday of tech losses masking broader equity resilience."

"After the bell, Apple then delivered a mixed set of results. While its Q3 sales slightly beat expectations ($114.5bn vs $113.5bn), the company projected a narrowing of its gross margin in the current quarter (45-46% vs 47% est.). Those margin pressures pushed Apple’s shares to a -3% decline in after-hours trading."

"Asian equity markets are mixed this morning as investors assess Apple’s earnings outlook and position for the upcoming US midterm elections. The KOSPI (-3.76%) is the region’s weakest performer but with the Nikkei closed for a holiday."

"Elsewhere, the Hang Seng (+0.52%) is modestly higher, while the CSI 300 (-0.08%) is little changed and the Shanghai Composite (-0.71%) has edged lower after the PBOC reiterated support measures aimed at strengthening market stability through greater use of stock-market support tools."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)