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Tuesday 20th March 2018

Apple Warning Rocks Global Markets

Business

Maurice Cassidy

Thu, 03 Jan 2019 21:32 GMT

A revenue warning from Apple Inc shook equity markets around the globe on Thursday January 3rd as concerns over the damaging US-China trade war and its impact on world economic growth prompted investors to seek safer havens, such as bonds and the Japanese yen.

Apple on Wednesday took the rare step of cutting its quarterly sales forecast, with CEO Tim Cook writing to shareholders with the news. He blamed slowing iPhone sales in China, whose economy has been dragged down by uncertainty around US-China trade relations.

However, some analysts noted that the high prices of new iPhones, combined with sophisticated and cheaper products from its competitors, may also be impacting sales at a time when consumers feel they have less to spend.

Asian technology suppliers were negatively affected in after-hours trade, triggering a broader sell-off in global markets. Apple, cutting its revenue forecast for the first time in nearly 12 years, saw its US-listed shares down more than 9% on Thursday.

To deepen the gloom, survey data from the Institute of Supply Management showed US factory activity slowed more than expected in December, resulting in a fall in non-tech stocks on Wall Street as well.

"That negative economic data, combined with the PMI (data) in China a couple of days ago, reconfirms the market's concerns that the global economy is slowing," said Jeremy Zirin, head of equities at UBS Global Wealth Management's Chief Investment Office.

Speaking to Reuters, Zirin said Apple's warning "raises concerns that we could see a broad-based weakness among companies with a high level of exposure to China."

Apple's news also worried the currency markets, with the safe-haven yen climbing against the dollar. The US dollar dropped by 1% against the yen, at 107.77 yen.


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