Shares in Apple suppliers lost ground across the world on Thursday after a rare revenue warning from the US tech group stoked fears over a slowing Chinese economy and weak smartphone demand.
Apple shares sank almost 9 per cent in pre-market US trade after the company blamed lower than expected sales on an unexpectedly sharp slowdown in China. Its Frankfurt-listed shares fell by a similar margin.
There was also turbulence in the currencies market as worries about the outlook for global growth deepened, lifting the haven appeal of the yen, which at one point gained over 3 per cent against the dollar.
“In fact, most of our revenue shortfall to our guidance, and over 100 per cent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad,” Apple chief executive Tim Cook said in an open letter to investors.
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ING China economist Iris Pang said despite the slowdown in China, smartphone manufacturers were struggling for sales amid a lack of new features.
“It is true that the Chinese economy is slowing but if there is a big marginal value-add in a new phone then demand is still there,” Ms Pang said, adding that demand should pick up again once new 5G technology is available in smartphones.
The moves also came after global financial markets started 2019 on a shaky footing amid concerns about a global economic slowdown.
European stock markets fell, with Frankfurt’s Xetra Dax 30 down 1.4 per cent. The region-wide Stoxx 600 lost 0.9 per cent. London’s FTSE 100 was down 0.4 per cent.
Equities
In Europe, chipmaker AMS down 18 per cent, and the Stoxx index tracking the technology sector down almost 3 per cent. Dialog Semiconductor fell 8 per cent.
In Taipei, Apple assembler Hon Hai Precision Industry, also known as Foxconn, dropped 2.1 per cent while chipmaker Taiwan Semiconductor Manufacturing Co fell 2.1 per cent. The Taiex was down 0.8 per cent.
South Korean chipmaker SK Hynix slipped 3.6 per cent and Samsung Electronics was down 1.8 per cent. The Kospi index in Seoul was off 0.2 per cent.
AAC Technologies fell 5 per cent and Sunny Optical was down 4.9 per cent, putting the Hong Kong-listed Apple suppliers among the Hang Seng’s worst performers for the day. The Hang Seng was 0.3 per cent lower. The CSI 300 of major companies listed in Shanghai and Shenzhen was down 0.1 per cent after earlier gains.
Australian stocks fared better with the S&P/ASX 200 up 1.3 per cent as the hit to the country’s currency boosted exporters.
“Alongside a drop for Apple shares in after-hours trade, the plunge in US futures forms a cloud above Asia markets into Thursday’s trade,” said IG analyst Jingyi Pan.
Japanese markets were closed for a national holiday.
Forex
The Japanese yen, seen as a haven during market uncertainty, was 1.5 per cent higher at ¥107.20 having earlier surged more than 3 per cent to ¥104.96, according to Refinitiv data.
The yen’s rally — its biggest gain in two years — reverberated across foreign exchange markets with the UK pound down 0.5 per cent at $1.2549, the Korean currency weakening by 0.8 per cent to Won1,128 and the New Zealand dollar 0.4 per cent lower at $0.6627.
The Australian currency, sensitive to the outlook for China, the main market for Sydney-listed metals miners, was 0.5 per cent lower at $0.6946 against the dollar. In a flash plunge after the Apple announcement, the currency earlier touched $0.6776, its lowest since early 2009.
The dollar index was 0.3 per cent weaker after closing 0.7 per cent higher on Wednesday.
China’s onshore renminbi, which moves within a trading band set by central bankers in Beijing, was 0.2 per cent weaker at Rmb6.8754.
Commodities
Brent crude was up 0.8 per cent at $55.34 a barrel.
Gold was 0.2 per cent higher at $1,288 an ounce.
