Can Apple Beat The Global Slowdown?

It’s that time of year again. September marks the launch of the new Apple iPhone (and a few other devices too). What will it mean for Apple’s share price?

Stock Of The Week: Apple

This could be a critical period for the big tech giants. As the Fed continues with their hawkish rhetoric and the much-hyped inflation peak looks uncertain, the tech-heavy US100 sits at a crucial juncture.

The level marked at 13727 was previously support and has now become resistance just below the 200 day moving average.

Global bonds resumed their selloff last week. Perhaps the most notable was the US 10 year benchmark returning to the 3% level. For a lot of the tech companies, higher interest rates are something of a headwind. Many of these companies are valued based on future cash flows. With higher interest rates, the value of future money is discounted by a higher amount.

In simple terms, the market can assign a lower value to that future money, which in turn may reduce the current value of the business.

Does Apple fall into this category though? This is no growth-hopeful startup. It’s one of the biggest companies in the world, with a top level Triple A credit rating at Moody’s.

Perhaps that’s why Apple is trading well above the 20 & 200 day moving averages (in contrast to the US100 which is still trading below the 200 day)

It’s rumoured that the Apple event will take place on September 7th, and the company typically launches the new iPhone around the same time every year. The next model would be the iPhone 14 with all of the variations, including the Pro which typically comes with an upgraded camera.

The newest versions of the Apple Watch could also be announced, including a pro version with titanium case and longer battery life for the more serious athletes.

Apple is also looking to shift some production of the Apple Watch and Macbook to Vietnam for the first time according to a Nikkei report. If confirmed, it would be the latest in a series of moves by the company as it continues to diversify production away from China.

Looking further ahead, there are questions about the health of the global smartphone market. At the end of July Counterpoint Research found that the global smartphone market declined by 9% YoY and 10% QoQ to 295 million units in Q2 2022.

Associate Director Jan Stryjak said:

“the second quarter of 2022 proved challenging for the global smartphone market, with most vendors recording year-on-year shipment declines. Samsung was the only top-five vendor that managed to grow over the year, although this was largely due to Q2 2021 being a particularly poor quarter for Samsung thanks to COVID-related production issues, especially at its Vietnam factory.

Nevertheless, Samsung retained the top spot, growing 8% year-on-year and gaining three percentage points of market share to 21%. Apple experienced a relatively small decline of 5% year-on-year due to macroeconomic headwinds, particularly in China.”

Can Apple buck this recent trend of declines, or will the slowing global economy drag their sales down too?