Shares skid as Apple warning stokes growth fears, 'flash crash' sweeps currencies

Shares skid as Apple warning stokes growth fears, 'flash crash' sweeps currencies

USA stock futures were still pointing lower on Thursday, with Nasdaq E-mini futures down 1.9 per cent and S&P 500 E-mini futures off 1.1 per cent following Apple's warning.

APPLE RELEASE: Apple CEO Tim Cook said in a letter to shareholders released after markets closed on Wednesday that he expects the tech giant's revenue for the October-December quarter to fall below internal and analysts' projections.

At one point, the yen was up 4.4 per cent against the dollar, though market watchers said that was partly due to the triggering of automated orders that led to a "flash crash" during a holiday in Japan.

But on broader markets Hong Kong fell 0.3 percent in the afternoon after tanking nearly three percent Wednesday, while Shanghai was marginally lower following a more than one percent drop after more weak Chinese economic data. "Algorithms would probably have then got involved after the initial run, I'd imagine", he said.

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 downward on the second day of trading in 2019. Cook attributed most of the revenue drop to China, where the economy has been slowing and where USA tariffs have been raised on more than $200 billion in goods, although the iPhone hasn't been affected directly so far.

Asian tech firms took a hit from the news, with Hong Kong-listed Sunny Optical and AAC Technologies both down around six percent, while Apple supplier TSMC shed 1.8 percent in Taipei, with Foxconn 0.2 percent off.

Elsewhere, sterling fell 0.5 percent to $1.2544 on Thursday.

After a strong 2018, analysts expect the dollar to come under pressure in coming months with diminishing prospects for USA central bank rate hikes in 2019, which has driven Treasury yields lower. A weaker Aussie dollar, which fell to near decade lows, also boosted exporters.

News out of Washington on Wednesday added to the grim mood, as a meeting between President Donald Trump and U.S. congressional leaders produced no agreement to end a partial government shutdown.

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He warned that government could reverse Delta's move at its own peril, as it would lead to massive job losses. The company called for policy interventions so as to build market confidence .

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These included the strength of the United States dollar, in addition to "challenges" in emerging markets such as those in Asia. According to Business Insider , $450 billion has been wiped from Apple's value since the company hit its peak on October 3.

Trump's demand for $5 billion in funding for a wall along the U.S. -Mexico border triggered the shutdown affecting about a quarter of the federal government and 800,000 federal workers.

The dollar was last 1.9 percent weaker against the yen at 106.85, having earlier fallen as low as 104.96, its lowest level since March 2018.

'FLASH CRASH' Currency markets saw a wild spike in volatility in early Asian trade, with risk aversion pushing the yen sharply higher against the United States dollar, breaking key technical levels and triggering stop-loss sales of U.S. and Australian dollars.

The two-year yield (US2YT=RR), was at 2.4777 percent compared with a USA close of 2.504 percent as signs of slowing growth ate away at expectations of further Federal Reserve rate hikes.

The two-year yield, was at 2.4777 percent compared with a USA close of 2.504 percent as signs of slowing growth ate away at expectations of further Federal Reserve rate hikes. The dollar was last 1.02 percent lower against the yen at 107.76 yen.

The euro was flat, buying US$1.1342, and the U.S. dollar index, which tracks the USA currency against a basket of major rivals, was 0.15 per cent weaker at 96.733.

Market watchers say the yen's surge may have further room to run as Japanese investors have made a beeline for overseas assets, particularly USA equities, in recent months on an unhedged basis and the yen rise would force them to cover some of their short positions. Slowing global growth is expected to coincide with an increase in crude supply, depressing prices.

The yen's surge against the dollar also pushed it higher against other major rivals such as the pound and the euro against which it rose 1.8 percent and 0.9 percent respectively.

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