US OPEN: Revenue warning from Apple sets the tone for markets

• Wall Street futures point to a lower open

• Apple (AAPL.US) doesn’t expect to meet revenue guidance this quarter

• Franklin Resources (BEN.US) to acquire Legg Mason (LM.US) for $50/share

US stock market futures point to a lower opening after a long weekend on Wall Street. Downbeat statement issued by Apple is the reason behind today’s poor performance of global equity markets. Elsewhere, two US asset managers are about to merge into a giant with $1.5 trillion assets under management.

Michael Bloomberg qualifies for Democratic debate in Nevada

According to the latest media reports, it looks like Michael Bloomberg qualified for the Democratic debate in Nevada, that will be held tomorrow. This will be the first debate, which does not require candidates to meet a certain donor threshold. This was the factor barring Bloomberg from taking part in previous debates as the US billionaire self-finances his presidential run. Most recent poll numbers showed Bernie Sanders with the biggest support (31%) and Bloomberg coming in second (19%).

Nasdaq (US100) is trading lower today and may remain under pressure due to Apple’s warning and its consequences on other sectors, like for example semiconductor manufacturers. The index tested the price zone at 9530 pts earlier today. In case the ongoing rebound fails to sustain momentum, this level will be a support to watch. However, it should be noted that after two previous tests of this zone, the index rallied to new ATH. Source: xStation5

Walmart (WMT.US) released earnings report for fiscal Q4 2020 (ended on January 31) ahead of the opening bell. The US retailer generated quarterly revenue of $141.61 billion, missing median estimate by 0.6%. Organic growth at Walmart brand stores in the US stood at 1.9% YoY (expected 2.4% YoY) while same-store sales at Sam’s Club stores increased 0.8% YoY (expected. 1.2% YoY). Company issued a forecast for fiscal 2021 that also came below expectations. Walmart said it expects fiscal-2021 EPS to come in the $5.00-5.15 range (expected $5.22). Walmart took note of the coronavirus outbreak and said that it closely monitors the situation.

Apple (AAPL.US) is playing a major role in today’s pullback on the global equity markets. In fact, Apple is the reason behind the pullback. The US iPhone manufacturer warned that it does not expect to meet revenue guidance for the current quarter amid the coronavirus outbreak. The company said that supply disruptions in China are the reason as well as weaker demand from Chinese customers. The stock is expected to open 4% lower today.

In spite of reporting rather disappointing earnings, Walmart (WMT.US) is trading higher in pre-market. The stock is seen opening near the $119.50 handle. Should upbeat sentiment towards the stock prevail, the first major test for bulls will be resistance zone ranging around $121.00 handle. Source: xStation5

According to the Reuters report, Tesla (TSLA.US) is in talks with Chinese battery manufacturer CATL over the possibility of using its cobalt-free batteries at Chinese factory. Cobalt is the most expensive commodity used in the production of EV batteries therefore striking an agreement could lead to lower prices of Tesla vehicles. Apart from that, the US EV manufacturer received an upgrade at Morgan Stanley. While the Bank left an “underweight” rating unchanged, the price target for a base case scenario was revised from $380 to $500. Moreover, a price target for the bull case scenario was boosted to $1200.

According to the press release, Franklin Resources (BEN.US) will acquire Legg Mason (LM.US) for $50 a share. The price represents an almost 23% premium against Friday’s close. Total transaction value stands at $4.5 billion. The tie-up would create a global investment manager with around $1.5 trillion in assets under management. Takeover will be an all-cash transaction. Both companies are expected to open higher.

Legg Mason (LM.US) tested the resistance zone at 50% Fibo level at the end of the previous week. However, the company is set to be acquired by Franklin Resources at $50/share. Having said that, the price zone at 78.6% Fibo ($51.50) could be in play today. Should the stock move below takeover price, the nearest support can be found at 61.8% Fibo level ($46). Source: xStation5