US pre-open: Stocks set for losses as Apple warning spooks investors

US stocks looked set for heavy losses at the open on Thursday as tech giant Apple’s decision to slash its first-quarter sales guidance spooked investors.

At 1125 GMT, Dow Jones Industrial Average and S&P 500 futures were down 1.6% and 1.7%, respectively, while Nasdaq futures were 2.7% lower.

Apple said after the close of US markets on Wednesday that its first-quarter sales would be lower than expected due to weaker sales in China. The company said it now expects revenues of around $84bn in the three months to 29 December, down from previous guidance of between $89bn and $93bn. This would mark Apple’s first year-on-year quarterly drop since 2016.

In a letter to shareholders, chief executive Tim Cook highlighted slowing growth in China and trade tensions with the US.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in greater China," Cook said.

The news from Apple only served to exacerbate worries about a slowdown in China, following disappointing Chinese manufacturing figures earlier in the week.

James Hughes, chief market analyst at Axi Trader, said: "Tech giant Apple sent alarm bells ringing last night after it cautioned the market that sales figures would disappoint. It’s activity both at home and across the Pacific in China that is biting, and the implications of this saw US index futures plummet shortly after the market closed.

"With Democrats set to assume a majority in Congress today, the political situation in the US seems unlikely to offer much relief to investors either. However a proposal to reopen a number of divisions of the government - which has been closed for almost two weeks following budget deadlock - may be sufficient to provide at least a modest degree of support for stocks, assuming it can succeed."

The Japanese yen surged to an eight-month high against the dollar after the Apple warning, breaking through key technical support levels as investors looked for a safe haven trade. In what was being described as a "flash crash" in currency markets, the yen also rose nearly 8% against the Australian dollar to its best level since 2009, and 10% versus the Turkish lira.

Apple shares were down 8.9% in pre-market trade, with other tech stocks such as Advanced Micro Devices, Skyworks and Nvidia all poised to open lower also.