Asian shares tumble after rare revenue warning from Apple
Shanghai — US stock futures fell and Asian shares wobbled on Thursday after a rare revenue warning from Apple added to worry about slowing global growth and weaker earnings.
The 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. Its shares tumbled 8% in after-hours trade.
The news sparked a “flash crash” in holiday-thinned currency markets as investors rushed to less risky assets, with the Japanese yen soaring against most major currencies in a matter of seconds.
US stock futures pointed to another rough start on Wall Street, with Nasdaq e-mini futures down 2.2% and S&P 500 e-mini futures off 1.3%.
MSCI’s broadest gauge of Asia-Pacific shares outside Japan fell 0.4% after an early attempt at a bounce. Japanese markets were closed for holidays but Nikkei futures dropped 1.9%.
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.
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 in 2018, some analysts wonder if more forceful stimulus will be needed to stabilise the world’s second-largest economy.
“Despite a more pro-growth policy stance, effectively since mid-2018, we expect growth to continue to slow in the foreseeable future as it appears to us that the government’s policy is still behind the curve,” economists at BofA Merrill Lynch said in a global research report.
“In our view, the next significant stimulus may occur only when the government senses that financial stability is in jeopardy.”
Apple’s surprise announcement weighed on tech shares across Asia, most notably in Taiwan and South Korea. Korean shares were 1.3% lower and shares in Taiwan lost 1.4%.
Australia bucked the trend, with the ASX 200 bouncing 1.6% after the previous day’s drubbing. A sudden slide in the Aussie dollar, which fell to near decade lows at one point, boosted shares of miners and other resource exporters despite the weakening China demand outlook.
The volatile day for Asian markets followed swings on Wall Street overnight, where shares slid in early trade on growth worries before clawing back losses, as surging oil prices drove gains in energy shares.
Apple specifically highlighted slowing Chinese growth and China-US trade tensions, exacerbating investors’ concerns about the health of the global economy.
“The fall in the EM [emerging market] manufacturing PMI [purchasing managers index] last month was fairly broad-based and supports our view that growth in the emerging world as a whole will slow this year,” Gabriella Dickens, an economist at Capital Economics, said in a note.
Adding to the sour mood, a meeting between US President Donald Trump and congressional leaders produced no agreement to end a partial government shutdown.
Trump’s demand for $5bn in funding for a wall along the US-Mexico border triggered the shutdown affecting about a quarter of the federal government and 800,000 federal workers.
Currency markets saw a wild spike in volatility in early Asian trade, with risk aversion pushing the yen sharply higher against the dollar, breaking key technical levels and triggering stop-loss sales of US and Australian dollars.
The dollar was last 1.6% weaker against the yen at ¥107.15, while the Australian dollar at one point hit levels against the Japanese yen not seen since 2011.
The euro was up 0.2%, buying $1.1365, and the dollar index, which tracks the US currency against a basket of major rivals, was 0.3% weaker at 96.503.
Amid the flight to perceived safety, the yield on benchmark 10-year treasury notes fell to 2.6328% compared with its US close of 2.661% on Wednesday.
The two-year yield, was at 2.4777% compared with a US close of 2.504% as signs of slowing growth ate away at the expectation of further Federal Reserve rate hikes.
US crude fell 1.8% to $45.71 a barrel after a sharp rise on Wednesday. Brent crude was down 1% at $54.38. 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% at $1,288.11/oz.