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.
People shop in an Apple retail store in Grand Central Terminal in New York City yesterday. Apple late on Wednesday cut its revenue outlook for the latest quarter, citing steeper-than-expected u201ceconomic decelerationu201d in China and emerging markets, factors that have contributed to sharp falls across stock markets since late last year.
