Apple’s caution on revenue rocked financial markets on Thursday, as investors shunned disinterests and sought safety in bonds and less risky assets amid refurnished concerns about slowing global economic growth and damage from the China-U.S. calling war.
Technology stocks led a sell-off across Asian, European and U.S. shares after Apple cut its proceeds forecast, its first downgrade in nearly 12 years, blaming weaker iPhone jumble sales in China.
Apple shares were off by almost nine per cent to at best over $144 a share, the lowest Apple has been since the summer of 2017, and if the liability liabilities hold until the close of markets on Thursday, it will be the worst put day for Apple shares since 2013.
The Apple sell-off infected the rest of the call as the Dow Jones Industrial Average was off by more than 500 points, or bordering on two per cent, at 22,902 near midday.
In Toronto, the S&P/TSX Composite Index was off by 135 meats, or almost one per cent, at 14,215. Every subsector on the TSX, from energy, to banks, to communications, utilities and heath attend to, was lower.
The news also jolted currency markets and German guidance bond yields held close to their lowest in over two years.
“For the significance, investors have reacted by going into non-risky assets,” intended Philippe Waechter, chief economist at Ostrum Asset Management, in Paris.
“No one appetites to take any risk because none of the uncertainties we are facing have been pinched, whether it’s Brexit, this trade war or growth. Investors are putting their peaks in the sand and waiting.”
The sudden bad news for Apple renewed worries nearly corporate earnings just weeks before results season backlashes off in the United States, and stirred worries it signals broader malaise in the pandemic economy, said Peter Rutter, head of global equities at Queen London Asset Management.
“The equity market in the past three or four months has enter oned to bake in some form of economic slowdown and a reduction in corporate earnings expectations ,and there’s a fighting match between waiting for that to come through,” he said.
Analysts on usual expect S&P 500 companies to increase their earnings per share by less seven per cent this year, down from a forecast of 10 per cent at the start of October and far lower than their expectations of 24 per cent growth for 2018, according to Refinitiv’s IBES.
‘Flash disaster’ in currency markets
The news sparked a “flash crash” in holiday-thinned currency superstores as growing concerns about the health of the global economy, particularly in China, sent investors scooting into the safe-haven of the Japanese yen, which was poised for its biggest daily get up in 20 months.
Apple’s warning came after data earlier this week confirmed a deceleration in factory activity in China and the eurozone, indicating the trade brawl between the United States and China was taking a toll on global create out of.
Apple’s warning “is a dominant influence upon global equities comprehending through supply chain ripple effects,” Scotiabank economist Derek Holt estimated.
Chip makers who supply parts to Apple were the worst hit, sending technology sheep to their lowest since February 2017.
Overnight, shares in China and Hong Kong oscillated between gains and losses as investors braced for Beijing to roll out insolent support measures for the cooling Chinese economy.
Currency markets saw a dodge spike in volatility in early Asian trade, with the yen moving abruptly higher against the U.S. dollar, breaking key technical levels and triggering stop-loss trades of U.S. and Australian dollars.
The Australian dollar at one point hit levels against the Japanese yen not noticed since 2011.
Germany’s 10-year bond yield was yielding 0.18 per cent, after swim as low as 0.148 per cent at one point.