Asia shares mostly lower as US futures point to further turmoil stateside
South Korea’s Kospi fell 0.81 percent to finish its trading day at 1,993.70 as shares of Apple suppliers Samsung Electronics and SK Hynix dropped 2.97 percent and 4.79 percent, respectively.
Over in the Greater China region, the Hang Seng index gave up earlier gains to slip 0.22 percent, as of its final hour of trade.
The mainland Chinese markets, watched in relation to Beijing’s ongoing tariff fight with Washington, reversed its earlier gains. The Shanghai composite closed largely flat at about 2,464.36 while the tech-heavy Shenzhen composite fell 0.798 percent to finish its trading day at around 1,246.37. The Shenzhen component lost 0.837 percent to close at about 7,089.44.
The ASX 200 in Australia, however, rose 1.36 percent to close at 5,633.40, with all the sectors seeing gains. The energy subindex rose 2.97 percent as shares of oil-related companies saw gains on the back of Wednesday’s strong rally in oil prices. Santos jumped 3.98 percent, Oil Search rose 2.59 percent and Woodside Petroleum advanced 3.44 percent.
“Asian markets may attempt to recover some of yesterday’s losses but are likely to remain cautious for now and await further cues on the US,” said OCBC Treasury Research in a morning note.
Japan’s stock markets were closed for a holiday on Thursday.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||20014.77||-62.85||-0.31|
|HSI||Hang Seng Index||HSI||25064.36||-65.99||-0.26|
|ASX 200||S&P/ASX 200||ASX 200||5633.40||0.00||0.00|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||7218.60||-11.86||-0.16|
Earlier during the session, the Dow had plunged almost 400 points while the Nasdaq and S&P 500 shed more than 1 percent.
Futures pointed to further volatility for the U.S. markets at Thursday’s open, after Apple warned that its first quarter sales would come in lower than previously expected.
Shares of major Apple suppliers in Taiwan saw declines following the Cupertino-based tech giant’s revenue guidance downgrade. Chipmaker Taiwan Semiconductor Manufacturing Company dropped 1.82 percent while contract manufacturing firms Hon Hai Precision, better known as Foxconn, fell 1.71 percent and Pegatron declined by 1.2 percent.
Apple blamed a variety of factors for the lowered guidance, including a weakening economy in China and lower-than-expected iPhone revenue. Apple said the lower-than-anticipated revenue happened “primarily in Greater China,” but also said that upgrades to new iPhone models in other countries were “not as strong as we thought they would be.”
The Invesco QQQ Trust, which tracks the tech heavy Nasdaq-100 Index, lost more than 2 percent in after hours trading on Wednesday. Apple shares cratered by 7 percent. The S&P 500 ETF Trust, tracking the broader market, lost more than 1 percent in extended trading.
Dow Jones Industrial Average futures dropped 338 points shortly after the open of trading Wednesday evening. As of 2:10 a.m. ET Thursday, Dow futures pointed to an implied plunge of 319.24 points for the index when it opens on Thursday. S&P 500 and Nasdaq futures also pointed to declines for the two indexes at Thursday’s open.
The Japanese yen rose sharply against the U.S. dollar in early Asian trade as investors sought safety in the Japanese currency. The yen last traded at 107.39 after seeing an earlier high of 104.96.
Meanwhile, the Australian dollar was at $0.6940, having crossed the $0.70 level overnight — a phenomenon not seen since Feb. 2016.
— CNBC’s John Melloy and Steve Kovach contributed to this report.
European stocks close lower as Apple guidance weighs
European Markets: FTSE, GDAXI, FCHI, IBEX
Most sectors ended the session in the red, with only food and beverages, telecoms and utilities posting gains.
Apple Chief Executive Tim Cook’s posted a letter to investors on Thursday in which he lowered the tech giant’s first-quarter revenue guidance to $84 billion, down from the $89 billion to $93 billion that had previously been forecast. The firm also lowered gross margin expectations to approximately 38 percent, down from a previously projected 38-38.5 percent.
Apple blamed a number of factors for the climbdown in guidance, including weakness in China’s economy and disappointing iPhone revenue. The news amplified fears of a downturn in global growth, as well as the effects of U.S.-Sino trade tensions on corporate earnings.
Europe’s tech sector suffered as a result, losing more than 4 percent of its value by the closing bell. Apple suppliers in the continent also faltered, with shares of Austrian chipmaker AMS plunging 23 percent and Swiss firm STMicroelectronics down nearly 12 percent at the close.
U.K. fashion retailer Next was a rare winner during the session, gaining 4.1 percent after reporting a jump in Christmas sales. The firm posted a 9.2 percent rise in in-store sales and a 15.2 percent jump in online sales on Thursday.
Stateside, the U.S. partial government shutdown continues as Democrats contest President Donald Trump’s demand for $5 billion to fund a wall on the border with Mexico.
U.S. markets were trading in negative territory on Thursday, with the Dow Jones Industrial Average dropping 1.9 percent. The S&P 500 fell 1.3 percent in morning trading, while the Nasdaq was down 1.5 percent.
Asian equities tumbled Thursday, with South Korea’s Kospi sliding almost 0.81 percent at the close as domestic Apple suppliers fell. China’s Hang Seng index dropped 0.22 percent.
Another focus for investors was an apparent “flash crash” in foreign exchange markets that saw the Japanese yen soar versus most major currencies within seconds. The U.S. dollar sank 1 percent against the yen to 107.83.
Elsewhere, German Economy Minister Peter Altmaier said in an interview published Thursday that the U.K.’s withdrawal from the European Union poses an economic risk, although he added that he expected growth in Germany to continue.
According to a survey released by U.K. industry body the British Chambers of Commerce on Thursday, the percentage of services firms reporting a rise in domestic sales fell to the lowest level in two years in the fourth quarter.
In terms of data, the IHS Markit/CIPS U.K. Construction Purchasing Managers’ Index (PMI) fell to 52.8 in December, down from 53.4 in the previous month. That figure marked a three-month low, a sent the British pound tumbling 0.35 percent versus the dollar to 1.2563.
The Swiss SVME PMI figure, meanwhile, rose to 57.8 in December, beating expectations for a reading of 57.2.
Dow tumbles more than 600 points on Apple plunge, rising fears of an economic slowdown
Fred Imbert,John Melloy, Eustance Huang
The Dow Jones Industrial Average dropped 568 points, or 2.4 percent, as Apple shares led the decline. The S&P 500 pulled back 2 percent as the tech sector fell 4.4 percent. The Nasdaq Composite 2.5 percent as Apple’s stock dropped 9.3 percent.
Apple said it sees first-quarter revenue of $84 billion vs. a previous guidance of a range of $89 billion and $93 billion. Analysts expected revenue of $91.3 billion for the period, according to the consensus estimate from FactSet. Apple blamed most of the revenue shortfall for struggling business in China.
“This piles on to existing anxiety of a slowdown in global growth,” said Jeff Kilburg, CEO of KKM Financial. “Apple can be used as a proxy to China’s growth.”
“While it’s likely a combination of both macro and micro, the contribution of the former means that maneuvering through the upcoming earnings season will be like swimming in shark infested waters,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, about what prompted Apple’s guidance cut. “That said, I’d argue it’s more of the latter.”
Apple’s warning also dragged down other companies that do big business in China. Caterpillar shares were down more than 3 percent. Boeing shares dropped 3.8 percent.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple CEO Tim Cook wrote in a letter to investors on the warning. “We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.”
Thursday’s decline in equities was accelerated by a weaker-than-expected reading on the U.S. manufacturing sector. ISM’s manufacturing index fell to 54.1 in December, economists polled by Refinitiv expected 57.9.
“We turned the calendar but we didn’t turn the trend in the markets,” said Eric Wiegand, senior portfolio manager at U.S. Bank Private Wealth Management. “We have continued to witness a deceleration in global growth. As we started this year, the purchasing manufacturers’ index data from around the world indicated perhaps a pace of softening that caught investors by surprise. That’s reinforced by today’s release of the ISM manufacturing numbers.”
Shares of Delta Air Lines fell more than 8 percent after the company issued slightly lower revenue guidance for the fourth quarter. Delta’s downturn dragged American Airlines and United Continental, as they pulled back 6.7 percent and 4.7 percent, respectively.
Biotechnology stocks bucked the overall negative trend in the market. The iShares Nasdaq Biotechnology ETF (IBB) rose 1 percent, led by a 22 percent surge in Celgene. The company’s stock rose after it agreed to be bought by Bristol-Myers Squibb for $74 billion.