AAPL is one of the world’s largest publicly traded companies and is viewed as a stock market bellwether by some – affording the company significant sway over equity sentiment
Trade war headwinds or concerns likely carry the largest implications for the broader market, while stock-specific themes may damage AAPL shares directly
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AAPL stock traded higher on Monday, likely in anticipation of quarterly results due Tuesday. The tech-giant currently stands as the second largest publicly traded company by market capitalization and some stock traders look to the corporation as a bellwether for the larger equity market. Consequently, Apple’s earnings report can carry significant implications for the entire equity market and have even sparked a currency flash crash. That said, there are various themes to watch, ranging from trade war concerns to sector-specific headwinds. Here are the three most important.

The first, and likely most important theme to be cognizant of, is commentary on the ongoing US-China trade war. Any indication that the trade spat has weighed, or will weigh, on earnings more than originally anticipated will likely rattle both Apple and broad-market investors alike. Given the company’s brand loyalty, size and robust cash reserves, it is widely believed Apple is well suited to withstand transitory threats. With that in mind, Apple shares may grapple with any negative development comparatively well while the broader market – comprised of company’s that do not enjoy the same attributes as Apple – may suffer the consequences. The broader equity implications this theme can carry make it the most important on the list.

Last week, Apple announced a $1 billion acquisition of Intel’s (INTC) smartphone modem business. The deal was inked to further progress Apple’s 5G technology for iPhones, but also carries consequences for another member of the tech sector – Qualcomm (QCOM). While the technology is still far from launch, the enhanced in-house capability for Apple will eventually allow Apple to avoid royalty payments to Qualcomm that total around $2 billion a year according to Bloomberg.

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While the acquisition does not have an immediate impact for the parties involved, it may weigh on QCOM earnings in the future while allowing Apple to provide stable pricing. Therefore, what investors should look for in the earnings call on Tuesday is any commentary regarding the timeline and corresponding cost-cutting or revenue forecasts from the freshly-signed deal. This is likely to have the least impact on the broader-market, but could directly influence AAPL, INTC and QCOM.

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