Hong Kong (AFP) – Most Asian markets extended the previous day’s sharp losses Thursday with technology firms tumbling after Apple slashed its revenue forecasts blaming slowing China sales.
The yen pared early sharp gains from a flash crash, which saw the dollar briefly plunge to its lowest level since March after the Apple announcement, while the Australian dollar hit a 10-year low against the greenback.
In early trade bargain-buyers capitalised on Wednesday’s hammering across Asia but were unable to sustain momentum with sentiment weak owing to uncertainty over a number of issues including the China-US trade war, China’s economic woes, the US government shutdown and Brexit.
Wall Street and European markets mostly recovered from early losses to end slightly higher but Apple’s announcement that it expected to earn less than expected in the key December quarter send shudders through markets.
The firm, which was already under pressure over signs that sales of its new iPhone were coming up short, blamed sluggish demand in China for the cut and citing the US trade war as a factor.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” chief executive Tim Cook told investors.
He told CNBC the tariffs row had “put additional pressure” on an already slowing Chinese economy, resulting in lower store and online traffic. The firm’s shares — already down about a third from their record high in March — dived seven percent in after-hours trading.
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.
– Flash crash –
But on broader markets Hong Kong fell 0.3 percent in the afternoon after tanking almost three percent Wednesday, while Shanghai was marginally lower following a more than one percent drop after more weak Chinese economic data.
Seoul retreated 0.8 percent, Singapore was one percent down while Wellington gave up 0.9 percent, with Taipei and Mumbai also in negative territory.
Sydney jumped more than one percent while Manila surged 2.2 percent. Tokyo was closed for a holiday.
Banny Lam, head of research at CEB International Investment Corp, warned of continued volatility.
“There are a lot of uncertainties lying ahead,” Lam told Bloomberg News. “The markets will likely be stuck in a downtrend over the next few weeks.”
The news from Apple sparked a sell-off in the currency market with the yen, a safe haven in times of turmoil, soaring around 3.7 percent to 104.87 against the dollar before the greenback recovered to around 107.50 later in the morning.
The Japanese unit also briefly soared about 3.5 percent against the Australian dollar, which is seen as a bellwether for China, and more than four percent on the euro.
“The Apple news is driving safe haven flows, which have seemingly triggered a flash crash in forex,” Brad Bechtel, global head of foreign exchange at Jefferies LLC, said.
Analysts suggested that a rush to the safety of the yen saw it rise, which then caused programmes to kick in that were set up by yen short traders to prevent them losing cash. The selling was amplified by thin liquidity owing to a public holiday in Japan.
The flash crash also saw the greenback surge around four percent against the Australian dollar to its highest level since 2009. The Aussie has been battered by slowing growth in China, a key export destination for the country’s commodities sector.
“Aluminium and copper were both off by more than two percent,” said analysts at NAB Markets Research.
– Key figures around 0720 GMT –
Hong Kong – Hang Seng: DOWN 0.3 percent at 25,055.65
Shanghai – Composite: FLAT at 2464.36 (close)
Tokyo – Nikkei 225: Closed for public holiday
Dollar/yen: DOWN at 107.15 yen from 109.10 yen at 2130
Euro/dollar: UP at $1.1372 from $1.1346
Pound/dollar: DOWN at $1.2560 from $1.2611
Oil – West Texas Intermediate: DOWN 91 cents at $45.63 per barrel
Oil – Brent Crude: DOWN 59 cents at $54.32 per barrel
New York – Dow: UP 0.1 percent at 23,346.24 (close)
London – FTSE 100: UP 0.1 percent at 6,734.23 (close)
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