Apple’s rare warning on revenue has rocked financial markets, reigniting concerns about slowing global economic and corporate growth and potential damage from Washington’s protracted trade row with Beijing.
Asian and European shares fell sharply, led by a sell-off in technology stocks, and US stock futures pointed to a weaker open on Wall Street, after Apple cut its revenue forecast, its first downgrade in nearly 12 years, blaming weaker iPhone sales in China.
The news also jolted currency markets.
Apples shares tumbled in after-hours trade and those listed in Frankfurt were down 8.6 per cent in early European deals.
The news sparked a ‘flash crash’ in holiday-thinned currency markets as growing concerns about the health of the global economy, particularly China, sent investors scurrying into the safe-haven of the Japanese currency. The yen was poised for its biggest daily rise in 20 months.
Apple’s alert followed data earlier this week that showed a deceleration in factory activity in China and the euro zone, indicating the ongoing trade dispute between the United States and China was taking a toll on global manufacturing.
Major European bourses opened firmly in negative territory – Frankfurt’s DAX, with its exposure to Chinese trade and tech-heavy constituents, was the biggest faller down as much as 0.8 per cent, while Paris’ CAC40 dropped 0.7 and London eased 0.2 per cent.
Chipmakers who supply parts to Apple were the worst hit. Shares in AMS, which provides the facial recognition sensors used in the latest iPhones, fell 19.4 per cent to the bottom of the STOXX.
US stock futures pointed to another rough start on Wall Street, with Nasdaq E-mini futures down 2.5 per cent and S&P 500 E-mini futures off 1.6 per cent.
MSCI’s broadest gauge of Asia-Pacific shares outside Japan fell 0.5 per cent after an attempt in Asian hours at a bounce. Japanese markets were closed for holidays but Nikkei futures dropped 1.8 per cent.
Shares in China and Hong Kong see-sawed between gains and losses as investors waited for Beijing to roll out fresh support measures for the cooling Chinese economy.
“Chinese authorities have got the luxury of having control not just of the fiscal parts of the government tool case, but also the monetary parts … and I suspect the Chinese authorities will use that,” said Jim McCafferty, head of equity research, Asia ex-Japan, at Nomura.
China’s central bank said late on Wednesday it was adjusting policy to benefit more small firms that are having trouble obtaining financing, in its latest move to ease strains on the private sector, a key job creator.
While more fiscal and monetary policy support had been expected in coming months on top of modest measures last year, some analysts wonder if more forceful stimulus will be needed to stabilise the world’s second-largest economy.
Apple’s surprise announcement weighed on tech shares across Asia, most notably in Taiwan and South Korea. An MSCI index of Korean shares lost 1.8 per cent and Taiwan shares fell 1.4 per cent.
Currency markets saw a wild spike in volatility in early Asian trade, with risk aversion pushing the yen sharply higher against the US dollar, breaking key technical levels and triggering stop-loss sales of US and Australian dollars.
The dollar was last 1 per cent weaker against the yen at 107.77, having earlier fallen as low as 104.96, its lowest level since March 2018. The Australian dollar at one point hit levels against the Japanese yen not seen since 2011.
The euro was up 0.3 per cent, buying $US1.1375, and the dollar index, which tracks the US currency against a basket of major rivals, was 0.3 per cent weaker at 96.52.
Amid the flight to perceived safety, German government bond yields held close to their lowest in over two years. Germany’s 10-year bond yield was most recently at 0.169 per cent, from a low of 0.148 per cent on the day.
US crude oil fell 1.8 per cent to $US45.71 a barrel, and Brent crude was down 1 per cent at $US54.34. Slowing global growth is expected to coincide with an increase in crude supply, depressing prices.
Gold was higher as the dollar weakened, with spot gold trading up 0.3 per cent at $US1,289.4 per ounce.