Apple margin outlook pressures tech as reported U.S. strike lifts oil

Hello, this is Leonie Kidd with today’s edition of Morning Squawk.

Investors will need to divide their attention today. 

On the one hand, Apple will put pressure on the tech sector, after its disappointing margin forecast overshadowed a solid set of earnings. 

But the oil trade is also heating up, with crude prices accelerating gains through overnight trade, following a surprise attack on Iran’s Qeshm Island. 

And, of course, it’s midterm day!

The nerves around AI stocks are rippling into Asian trade, with the tech-heavy South Korean and Taiwanese markets both trading sharply lower, and chip stocks down across Europe. The Nasdaq-100 closed in correction territory on Monday, more than 10% below its Oct. 6 record high.

Futures are flat, but with more action in the oil markets and midterm voting underway, it’s set to be another unpredictable session. 

• Analysis: Futurum Group’s Daniel Newman told CNBC that the next leg of the AI trade is not earnings-dependent, saying, “A ceasefire could do more for the AI trade this month than any earnings print. Lower oil takes pressure off a December hike and cuts the cost of capital for everyone building data centers.”
• Coming up: Squawk Box will speak to Pershing Square CEO Bill Ackman for his take on the market moves, after saying geopolitics and inflation are holding back a “booming market environment.”

Shares in Apple are under pressure in premarket trading, after better-than-expected revenues failed to offset a disappointing margin forecast. 

Here are the topline numbers: 

• EPS: $2.10 vs $1.99 expected
• Revenue: $114.48 bn vs $113.39 expected

Despite the strong performance across its product lines, the iPhone maker is predicting a gross margin of 45-46% as Apple reckons with the global memory chip crunch. 

• Why it matters: The last time Apple guided at this level was almost four years ago, according to CNBC’s Robert Hum.
• Ternus to CNBC: New CEO John Ternus told CNBC’s MacKenzie Sigalos on the earnings call, “I think at this point, with everything we’ve achieved, it just feels like we’ve never been more confident that the best is yet to come.”
• Targets: Morgan Stanley has cut its price target on Apple to $350 from $355, while JPMorgan has reduced its target to $355 from $360. 

Iran has claimed it is ready to respond “forcefully” to U.S. strikes, after the American military reportedly launched an attack on Qeshm Island overnight. 

A U.S. official told The Wall Street Journal that Washington has been carrying out “limited strikes” against the country in recent weeks. The military campaign against Iran has been kept quiet on purpose so as not to signal any intention of major combat escalation, the report said, quoting an unnamed official.

• The backdrop: The Trump administration has been minimizing expectations of active conflict ahead of the midterm vote, while Vice President JD Vance told CNN he is confident about “the prospect of potentially coming to a negotiated settlement.”
• Why it matters: Oil prices are climbing on the developments, rebounding from a significant sell-off on Monday. 

CNBC’s Luke Fountain has taken an in-depth look at how the election could reshape the outlook for certain companies heavily exposed to Washington, in particular defense, healthcare, crypto and AI.

• Why it matters: Historically, stocks have performed well under a divided government. 
• Volatility: CNBC’s Eamon Javers will investigate how there could be some surprising areas of cooperation on populist-style measures. 
• Overnight: Follow CNBC’s Megan Cassella as she dives into the toss-up races to watch in both the House and the Senate. 
• Live blog: Follow all the latest developments with CNBC’s live blog, which kicks off at 12pm ET. Find that here. 

North Korea denies links to Binance hack as researchers trace stolen billions

North Korea rejected allegations linking Pyongyang to the estimated $6.3 billion Binance hack, calling the accusation a “grave political provocation,” according to state media.

Kim Yo Jong, sister of North Korean leader Kim Jong Un, denounced the FBI’s attribution of the attack to North Korea-linked hacking group TraderTraitor, Yohnap reported Tuesday, citing the state-run Korean Central News Agency.

Blockchain analytics firms including Elliptic and Chainalysis have also linked the attack and subsequent movement of the stolen funds to North Korea-linked actors.