Apple plunges $64 billion, dragging global stocks after shock sales warning

Roman Schwartz
January 5, 2019

The yen rocketed higher on Thursday and is poised for its biggest daily rise in 20 months as growing concerns about the health of the global economy, particularly China, sent investors scurrying into the safe-haven of the Japanese currency.

After a roller-coaster day of trading to start 2019, global markets were enduring more turbulence Thursday after Apple warned investors that sales were slowing in China, reigniting fears about a slowdown in the world's second-largest economy.

The Cupertino, California-based tech giant blamed fewer iPhone upgrades and slowing sales in China in warning about revenues in its most recent quarter, its first such warning since 2007.

Apples shares tumbled in after-hours trade and those listed in Frankfurt (AAPL.F) were down 8.6 percent in early European deals.

But on broader markets Hong Kong fell 0.3 percent in the afternoon after tanking nearly three percent Wednesday, while Shanghai was marginally lower following a more than one percent drop after more weak Chinese economic data.

Survey data from the Institute for Supply Management showed USA factory activity slowed more than expected in December, sending stocks on Wall Street lower.

MSCI's broadest gauge of Asia-Pacific shares outside Japan fell 0.6 percent after an early attempt at a bounce. Japanese traders were on holiday.

"Chinese authorities have got the luxury of having control not just of the fiscal parts of the government's tool case, but also the monetary parts of the government's tool case", 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 which are having trouble obtaining financing, in its latest move to support the cooling economy.

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USA and European stocks got a boost as the stronger-than-expected jobs report soothed some concerns of slowing economic growth.

South Korea's Kospi lost 0.2 percent to 2,007.06 and Taiwan's benchmark fell 0.5 percent.

The yen pared early sharp gains from a flash crash, which saw the dollar briefly plunge to its lowest level since March after the Apple announcement, while the Australian dollar hit a 10-year low against the greenback.

At session lows, it has fallen more than 6.5 per cent in the last five trading sessions.

At one point the Aussie dollar was off 4% against its U.S. counterpart.

The New Zealand dollar also took an initial beating on the yen to hit its lowest since late 2012, though whether any trades were done around those levels was hard to say.

The yield on US 10-year treasuries fell to 2.63 percent, the lowest in almost a year on Wednesday.

The yen's surge against the dollar also pushed it higher against other major rivals such as the pound and the euro, against which it rose 1.8 per cent and 0.9 per cent respectively.

US crude fell 2.1 percent to $45.57 a barrel, and Brent crude was down 1.2 percent at $54.24. Slowing global growth is expected to coincide with an increase in crude supply, depressing prices. US crude futures settled 87 cents higher at $47.96 a barrel, a 1.85 percent gain.

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