Asian technology firms fell after Apple slashed its revenue outlook for the December quarter blaming weak sales in China and citing the US trade row
Hong Kong (AFP) - Most Asian markets extended the previous day’s sharp losses Thursday with technology firms tumbling after Apple slashed its revenue forecasts blaming slowing China sales.
The yen soared against a number of other currencies including the dollar, euro, Australian dollar and Turkish lira in a flash crash fuelled by the Apple announcement.
In early trade bargain-buyers capitalised on Wednesday’s hammering across Asia but were unable to sustain momentum with sentiment weak owing to uncertainty over a number of issues including the China-US trade war, China’s economic woes, the US government shutdown and Brexit.
Wall Street and European markets mostly recovered from early losses to end slightly higher but Apple’s announcement that it expected to earn less than expected in the key December quarter sent shudders through markets.
The firm, which was already under pressure over signs that sales of its new iPhone were coming up short, blamed sluggish demand in China for the cut and cited the US trade war as a factor.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” chief executive Tim Cook told investors.
He told CNBC the tariffs row had put “additional pressure” on an already slowing Chinese economy, resulting in lower store and online traffic. The firm’s shares – already down about a third from their record high in March – dived seven percent in after-hours trading.
Asian tech firms took a hit from the news, with Hong Kong-listed Sunny Optical and AAC Technologies down 6.8 and 5.4 percent, while Apple supplier TSMC shed 1.8 percent in Taipei, with Foxconn 0.2 percent off.
- Flash crash -
But on broader markets Hong Kong fell 0.3 percent after tanking almost three percent Wednesday, while Shanghai was marginally lower following a more than one percent drop after more weak Chinese economic data.
Seoul retreated 0.8 percent, Singapore was one percent down while Wellington gave up 0.9 percent, with Taipei and Mumbai also in negative territory.
Sydney jumped more than one percent while Manila surged 2.2 percent. Tokyo was closed for a holiday.
London fell 0.4 percent in early trade while Paris and Frankfurt each lost 0.8 percent.
Banny Lam, head of research at CEB International Investment Corp, warned of continued volatility.
“There are a lot of uncertainties lying ahead,” Lam told Bloomberg News. “The markets will likely be stuck in a downtrend over the next few weeks.”
The news from Apple sparked a sell-off in the currency market with the yen, a safe haven in times of turmoil, soaring around 3.7 percent to 104.87 against the dollar before the greenback recovered later in the day.
The Japanese unit also soared to a 10-year high against the Australian dollar, which is seen as a bellwether for China, and the euro, while the Turkish lira was down a similar amount.
“The Apple news is driving safe haven flows, which have seemingly triggered a flash crash in forex,” Brad Bechtel, global head of foreign exchange at Jefferies LLC, said.
Analysts suggested that a rush to the safety of the yen saw it rise, which caused programmes that were set up by yen short-sellers to prevent them losing cash to kick in, exacerbating the problem. The selling was amplified by thin liquidity owing to a public holiday in Japan.
The flash crash also saw the greenback surge around four percent against the Australian dollar to its highest level since 2009. The Aussie has been battered by slowing growth in China, a key export destination for the country’s commodities sector. The lira was also down almost 10 percent against the greenback.
“The moves were very violent,” Stephen Miller, an adviser at Grant Samuel Funds Management, said. “It would have caught some by…surprise.”
Oil tumbled on lingering concerns about whether OPEC-led production cuts would be enough to turn around prices as supplies remain high and demand weakens. Prices last year suffered their first annual decline since 2015 and are 40 percent down from their four-year peaks reached in early October.
- Key figures around 0810 GMT -
Hong Kong - Hang Seng: DOWN 0.3 percent at 25,064.36 (close)
Shanghai - Composite: FLAT at 2464.36 (close)
Tokyo - Nikkei 225: Closed for public holiday
London - FTSE 100: DOWN 0.4 percent at 6,705.04
Dollar/yen: DOWN at 107.61 yen from 109.10 yen at 2130
Euro/dollar: UP at $1.1362 from $1.1346
Pound/dollar: DOWN at $1.2545 from $1.2611
Oil - West Texas Intermediate: DOWN 90 cents at $45.64 per barrel
Oil - Brent Crude: DOWN 60 cents at $54.31 per barrel
New York - Dow: UP 0.1 percent at 23,346.24 (close)