Asia markets mostly lower as tech firms soured by Apple
The yen soared against a number of other currencies including the dollar, euro, Australian dollar and Turkish lira in a flash crash fuelled by the Apple announcement.
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 sent 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 cited 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 down 6.8% and 5.4%, while Apple supplier TSMC shed 1.8% in Taipei, with Foxconn 0.2% off.
But on broader markets Hong Kong fell 0.3% 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%, Singapore was one percent down while Wellington gave up 0.9%, with Taipei and Mumbai also in negative territory.
Sydney jumped more than one percent while Manila surged 2.2%. Tokyo was closed for a holiday.
London fell 0.4% in early trade while Paris and Frankfurt each lost 0.8%.
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% to 104.87 against the dollar before the greenback recovered later in the day.
The Japanese unit also soared to a 10-year high against the Australian dollar, which is seen as a bellwether for China, and the euro, while the Turkish lira was down a similar amount.
“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 caused programmes that were set up by yen short-sellers to prevent them losing cash to kick in, exacerbating the problem. 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. The lira was also down almost 10% against the greenback.