- Global stocks slide after a shock revenue guidance downgrade from Apple, and troubling comments about the economic impact of Trump’s trade war from CEO Tim Cook.
- During the European morning, tech stocks slumped while Chinese indexes fell almost 1%.
- US futures are also pointing to a horrible day stateside, with the Nasdaq set to drop 2.5%.
After a rollercoaster day of trading to start 2019, global markets are enduring more turbulence on Thursday after Apple warned investors that sales were slowing in China, reigniting fears about a slowdown in the world’s second largest economy.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple said after the close of trading on Wednesday.
Apple plunged 8% in after-hours trading and was down 7.5% in US premarket trading as of 9:30 am in London (4:30 am in New York). That sent so called FAANG (Facebook, Apple, Amazon, Netflix and Google) stocks tumbling as well. A slump in tech shares dragged global markets lower.
“The trade tensions between the United States and China put additional pressure on their economy,” Cook said in an interview with CNBC on Wednesday.
Cook’s words, as well as continuing fears around monetary policy tightening from global central banks and a general slowdown in the world economy, have helped push markets downwards on the second day of trading in 2019.
Here’s the scoreboard:
- FAANG stocks slid, with Facebook down 1.6%, Amazon down 2.1%, Netflix down 2%, and Google down 2.1%
- US stocks look set for a substantial drop Thursday following Cook’s comments, which came after markets closed for the day. Futures point to a fall of 2.5% in the tech-heavy Nasdaq, while both the S&P 500 and Dow are set to open 1.3% lower.
- In Asia, China’s Shenzhen Composite ended 0.8% lower, while Japan’s Nikkei 225 lost 0.3%.
- As European trading kicked off, shares also fell, with the Euro Stoxx 50 broad index down 0.7%, and Germany’s DAX down 0.8%.
Thursday’s market moves extend a brutal start to the new year after 2018 ended on a sour note for markets. The S&P 500 was down 6.2% in 2018, booking its worst year since the financial crisis and worst December since the Great Depression.
Away from stocks, currency markets also took a pounding overnight with a suspected “flash crash” sending the dollar, pound and euro sharply lower, and pushing the Japanese yen into orbit.
The moves, which are also thought to be linked to Cook’s comments, saw investors pull money rapidly out of Western currencies like the dollar, and push it into the perceived safe haven of the yen.
Sharp moves in the yen
At its peak, the yen was up around 2.5% against the dollar. The dollar tumbled to an intra-day low of 104.96 yen, its lowest since March 2018.
The Australian dollar, often considered a gauge of global risk appetite, fell to its lowest level since 2009 in early Asian trade to an intra-day low of $0.6776.
The spike in risk aversion triggered massive stop-loss flows from investors who had held short positions on the yen for months. A lack of liquidity, with Japan still on holiday after the New Year, added to the sharp surge.