Stock markets retreated yesterday as China’s slowing economy forced Apple to slash its revenue forecast, wiping more than $70bn from its value and dragging down share prices in the wider technology sector.
Across Europe, London’s FTSE 100 fell 0.6% to close at 6,692.66; Frankfurt’s DAX 30 fell 1.6% at 10,416.66, while Paris’ CAC 40 lost 1.7% at 4,611.48.
Apple late on Wednesday cut its revenue outlook for the latest quarter, citing steeper-than-expected “economic deceleration” in China and emerging markets, factors that have contributed to sharp falls across stock markets since late last year.
The rare revenue warning from Apple suggested weaker-than-anticipated sales of iPhones and other gadgetry, in part because of trade frictions between Washington and Beijing.
Apple shares plunged by 9.5% in late morning trading.
That values the group at less than $680bn — far from the landmark $1tn level it reached in August.
US stocks indices were also hard hit, with the Dow down 2.4% in late morning trading.
“For a while now there’s been an adage in the markets that as long as Apple was doing fine, everyone else would be OK. Therefore, Apple’s rare profits warning is a red flag for market watchers,” noted Neil Wilson, chief market analyst at Markets.com.
“A lot of this is Apple-specific... But the warning also tells a lot about what is happening on in the broader global economy, specifically China.
It tells us that China is experiencing a period of softness,” he added.
Apple’s announcement hit the tech sector, in particular its suppliers.
Chip-maker Broadcom saw its Nasdaq-listed shares fall 5.8%.
In European trading, shares in Franco-Italian group STMicroelectronics dived 11.7%. German semiconductor giant Infineon was down 4.7%.
Asian tech firms earlier took their own hit, with Hong Kong-listed Sunny Optical and AAC Technologies down 6.8% and 5.4%, while Apple supplier TSMC shed 1.8% in Taipei.
“A flagging Chinese economy and fewer (iPhone) upgrades are the headline reasons for Apple’s stumble, but read between the lines and the tech giant is just a whisker away from suggesting it may have pushed customers too hard on price,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
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