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While you were sleeping - Apple turns sour

Thursday 12th September 2013

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Wall Street advanced as the likelihood of a US military strike against Syria diminished, outweighing a drop in Apple shares amid disappointment about its two latest iPhone products.

In late afternoon trading in New York, the Dow Jones Industrial Average added 0.67 percent, while the Standard & Poor's 500 Index advanced 0.23 percent. The Nasdaq Composite Index slipped 0.10 percent.

Gold declined as a result of decreasing tension over Syria.

"The likelihood of a US military attack on the Syrian regime continuing to decrease is very bearish for safe-haven assets like gold," Jim Wyckoff, a senior analyst at Kitco, a research company in Montreal, said in a report, according to Bloomberg News. "There is an increase in investor risk appetite worldwide."

Indeed, investors snapped up a record US$49 billion of bonds sold by Verizon Communications, helping to fund its US$130 billion buyout of Vodafone's 45 percent stake in Verizon Wireless.

"The sheer size of this deal is impressive in and of itself," Bonnie Baha, who heads Global Developed Credit at DoubleLine, told Reuters. "It just goes to show that despite the spectre of higher [US] Treasury rates going forward, investor demand remains for attractively priced corporate credit deals."

Meanwhile, shares of Apple dropped, last down 5 percent to US$469.83, extending losses from yesterday when the company unveiled its two latest iPhones.

Analysts at UBS, Bank of America and Credit Suisse Group downgraded Apple's stock, saying the high price its iPhone 5C, starting at US$99, will limit sales in emerging markets, according to Bloomberg News.

"Investors were put off that Apple's price point didn't go low enough to attract a new market. It doesn't have the same range in price that Apple's competitors have," Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, told Reuters.

"Also, there was nothing transformational announced. It has the fingerprint scan and new colours, but bigger features, like different screen sizes, don't seem to be at the ready. This was less than expected from a company that has a reputation for surprising with a killer product or strategy," Luschini said.

In Europe, the Stoxx 600 Index closed 0.4 percent higher from the previous close, ending at the highest level in more than five years. The UK's FTSE 100 and France's CAC 40 both gained 0.1 percent, while Germany's DAX gained 0.6 percent.

In the UK, unemployment posted a surprise drop in the three months through July, falling to 7.7 percent.

In Paris, the French government said it will take two more years than earlier forecast for it to put its books in order. The government also lowered its projection for growth in 2014 to 0.9 percent from 1.2 percent. It expects growth of 0.1 percent in 2013.

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