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Apple Downgrade Tanks Global Market, Tech Supply Chain Falls 20%, US Equities Resume Slide

Thomas Hughes

Asian Markets Fall On Apple Downgrade

Markets in Asia were down across the board following a guidance update from tech giant Apple. The company’s CEO Tim Cook says 4th quarter revenue is going to fall short of previous guidance by more than 6% as weak sales of iPhones and slowing in China weighs on outlook. The news, not surprising given the weakness in economic data over the past month, was not well received by the market. Shares of Apple fell nearly -9.0% in the US after-hours session.

Losses in the region were minimal compared to what is happening in other markets. The Korean Kospi fell hardest, shedding -0.81%, as it is most exposed to Apple’s supply chain. The Nikkie posted the next largest decline, about -0.30%, while the Heng Seng and Shang Hai Composites fell -0.26% and -0.04% respectively.

Australia was the one market to buck the trend in tech as it is more heavily exposed to resources, energy, and materials. The ASX was able to post a gain near 1.25% on strength in energy fueled by Wednesday’s rally in oil.

Europe Dragged Lower By Apple Supply Chain

Indices in the EU were hit much harder by Apple’s profit warning falling more than -1.0% in most cases. The German DAX led the way with a loss of -1.25% at midday, followed by a -1.15% decline in the CAC and a more modest -0.36% decline in the UK FTSE.

Tech led the declines in Europe as traders flee the Apple-trade. Suppliers from chip-makers to components suppliers and assemblers fell hard on the Apple downgrade. Shares of Austrian chip-maker AMS fell the hardest, down nearly -20% in early trading, with shares of STMicroelectronics and others down around -10%.

In the UK markets were buoyed by better than expected holiday sales from retailer Next. Next reports stronger than expected comp sales, stronger than expected online sales, and stronger than expected net revenue for the holiday period and sent shares up about 5.0%. On the Brexit-front, a German policymaker says the Brexit poses an element of economic risk but it won’t have too much impact on German activity.

US Equities Resume Slide, No End To Government Shutdown In Sight

US equities were indicated to open lower in Thursday trading as Apple woe and fear of China’s slowing economy and growing economic troubles weigh on sentiment. Traders should expect to see tech lead the market lower in Thursday trading.

In governmental news, the Democrats had been prepared to submit two plans for funding the government without giving money to Trump’s wall but no deal has been reached. President Trump has doubled-down on his pledge to keep the government closed until wall funding is secured.

The indices were looking at losses near -2.0% in the earliest hours of the pre-open session but those losses were lessened after the release of key employment data. The ADP employment report shows the US economy added more than 270,000 new jobs in the last month, more than 100K above expectations. The news is contradictory to evidence of slowing global economics and points to ongoing strength in US business activity. The next major market-moving data is due out tomorrow, the NFP and unemployment figures.

This article was originally posted on FX Empire