Apple’s iPhone sales fell in the all-important December quarter, a sign that its artificial-intelligence software has yet to kick off a new cycle of growth for its most valuable product. On Thursday, Apple reported that iPhone sales for the quarter were down nearly 1% from the prior year to $69.1 billion, a miss from the $70.7 billion analysts were projecting, according to FactSet. Apple’s total revenue was $124.3 billion, rising almost 4% from the same quarter last year. Net income was $36.3 billion, up more than 7% from the prior year. Analysts, on average, had projected revenue of $124.3 billion and net income of $35.6 billion. The company said in its earnings report that sales dropped in China by more than 11% to $18.5 billion, missing the $20.9 billion analysts had expected. Kevan Parekh, Apple’s newly appointed chief financial officer, said that the company saw better iPhone 16 sales in markets where its new AI tools, called Apple Intelligence, have been launched. In December, Apple Intelligence was available in English speaking countries such the U.S., U.K., Australia and Canada, among others. The company’s services business, which includes App Store transactions as well as its roster of subscription services, grew 13.9% to $26.3 billion in sales, slightly beating analyst estimates of $26.1 billion. Meanwhile, Apple has been noticeably absent from the AI spending craze. Investors this week saw the company’s lack of big capital expenditures as an unexpected positive. Apple’s shares rose 3% in after-hours trading.

The Swiss stock market continued to rise on Thursday. The SMI increased by 0.6 per cent to 12,605 points. The index reached another high for the year. Among the 20 SMI stocks, there were 15 price gainers and five price losers. A total of 17.99 (previously: 19.43) million shares were traded. The main focus was on the reporting season. ABB shares turned negative over the course of the day and closed trading as the weakest SMI stock with a discount of 1.8. The margin forecast for the first quarter appears conservative, according to analysts at Jefferies. However, stronger than expected order momentum in the fourth quarter was a positive surprise despite some challenging end markets, as Vontobel noted. In contrast, the shares of index heavyweight Roche climbed 1.5 per cent. The solid full-year results, which according to UBS were largely in line with market expectations, were driven by the pharmaceuticals business, while diagnostics lagged slightly behind. The outlook was in line with expectations, Jefferies noted. However, the analysts considered upward revisions to expected earnings per share of between 2 and 4 per cent to be possible.Swatch shares closed up 2.2 per cent after initial losses. The watch manufacturer reported weaker-than-expected sales and earnings for 2024, as Vontobel noted. SoftwareOne shares were up 4.8 per cent at the end of trading. The provider of software and cloud solutions had entered into a strategic partnership with ServiceNow. This is intended to optimise IT investments, reduce risks and accelerate digital transformation.

Europe
The European stock markets edged higher on Thursday, as the European Central Bank (ECB) cut its key interest rates by a quarter of a percentage point, in line with market expectations, and announced that it intended to continue its cycle of monetary easing. The Stoxx Europe 600 index ended the session up 0.9% at 538.8 points. In Paris, the CAC 40 and SBF 120 gained 0.9% each. The DAX 40 advanced by 0.4% in Frankfurt and the FTSE 100 climbed by 1% in London. STMICROELECTRONICS (-10.7%): the semiconductor manufacturer announced on Thursday that it expected a further contraction in sales and gross margin in the first quarter of this year, amid weak demand for its products for the automotive and industrial equipment sectors. MERSEN (+16.1%): the industrial group announced on Wednesday that its current operating margin would be at the top end of its previous forecasts for the 2024 financial year, after publishing annual revenues that were slightly above expectations. MEDINCELL (-3%): the biotech fell further on Thursday, after dropping 4.5% on Wednesday following a late session stall.

United States
Major indexes pared afternoon gains after President Donald Trump’s latest round of tariff threats against Mexico and Canada. The Dow industrials rose 0.4%, while the S&P 500 added 0.5%. The Nasdaq Composite was 0.3% higher. Stocks retreated from session highs when Trump reiterated that 25% tariffs on imports from both countries were coming this weekend. The Dow Jones Industrial Average briefly fell into the red, before recovering to finish 169 points higher. The Dow industrials and S&P 500 rose modestly, with tech stocks among the notable movers after a spate of earnings reports. Shares of utilities led gains in the S&P 500, while tech was the only sector to decline. Tesla, Meta and International Business Machines all gained following results late Wednesday. Microsoft stock, however, dropped sharply after its cloud-computing growth disappointed investors. Executives at Microsoft and Meta were enthusiastic about artificial intelligence, vowing to plow ahead with big spending plans despite the jolt to tech stocks earlier this week from the emergence of Chinese startup DeepSeek. And SoftBank is in talks to invest as much as $25 billion in ChatGPT maker OpenAI. Enthusiasm for AI technology has fueled market gains in recent months, with traders placing ever-higher valuations on companies participating in the race. That leaves some investors fearing the extended rally is growing precarious. American Airlines shares declined 2.5% after a jet operated by the carrier crashed following a midair collision.

Asia
Small stock market advances in Tokyo and a more significant drop of 1.2 per cent in Seoul characterise the stock market picture in East Asia on Friday. Semiconductor stock SK Hynix plummeted by 21 per cent, while Hanmi Semiconductor lost 8 per cent. Heavyweight Samsung Electronics fared much better with a drop of 1.3 per cent. This may be supported by new business figures. Among other things, Samsung earned more than expected in the fourth quarter of 2024. In Tokyo, the Nikkei-225 climbed 0.2 per cent to 39,578 points. There is still no trading in Shanghai and Hong Kong due to the Chinese New Year holiday. Stock trading will resume in Hong Kong on Monday and in Shanghai on Wednesday. Following a profit forecast for 2025, Chugai Pharmaceutical surged 6.2 per cent in Tokyo. NEX even jumped 18 per cent after the electronics group raised its profit forecast for the financial year.

Bonds
Yields on U.S. government debt were falling slightly Thursday as traders focused on data that showed economic growth slowing in the U.S. and stalling in three countries in Europe at the end of last year. The 10-year Treasury note yield edged down by one basis point (0.01 percentage point) to 4.53%. The 2-year Treasury note yield remained unchanged at 4.22%.

Analysis
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UBS raises EssilorLuxottica to 266 (248) EUR/Neutral - Trader

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