Europe close: Stocks reel after Apple lowers guidance
Stocks across the Continent were left reeling after US technology giant Apple warned that its sales over the next few months were set to sharply undershoot forecasts due to poor sales in China, stoking renewed concerns regarding the outlook for the Asian giant and the global economy.
Shares of the global bellwether for tech stocks were pumeled in Wall Street trading, with a 9% drop in its stock price erasing roughly $70bn from the company's market value.
The impact of the announcement was felt across asset classes, pushing the US dollar down by almost 4% against the Japanese yen at one point overnight as some investors raced to close so-called 'carry trades'.
Commenting on the moves in financial markets overnight, Neil Wilson, chief market analyst at Markets.com, said: "For a while now there's been an adage in the markets that as long as Apple was doing fine, everyone else would be OK. Therefore, Apple’s rare profits warning is a red flag for market watchers. The question is to what extent this is more Apple-specific, or more macro?"
Against that backdrop, by the end of trading the benchmark Stoxx 600 had fallen 0.98% or 3.29 points to 333.92, alongside a drop of 1.55% or 163.53 points to 10,416.66 for the German Dax and a decline of 1.66% or 77.90 points to 4,611.49 for the Cac-40.
Unsurprisingly, the biggest drag in stockmarkets was technology issues, with the Stoxx 600 sector gauge retreating by 4.19% to 375.52. Shares of chip makers were knocked lower as Apple's warning reverberated throughout the sector, with stock in ASML down by 4.16% and Infineon retreating 4.88%.
After the closing bell on Wall Street on Wednesday, Apple's chief, Tim Cook, told investors he expected the company's first quarter sales to clock-in at approximately $84bn, which was significantly less than the range of between $89bn to $93bn that the company had guided towards previously.
Cook blamed weaker demand for iPhones and slower growth in China for the lowered guidance.
"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," the executive said.
Nevertheless, while not all analysts were quite as upbeat, there was also some talk in markets to be heard regarding the prospect for economic stimulus in China, with those at Danske Bank saying: "We look for US-China deal in next 3-6 months to remove a key headwind. We also expect further stimulus coming soon (big tax cut to both consumers and companies and one or more reductions in the reserve requirement ratio)."
Meanwhile, in the background, a meeting between top Democratic and Republican congressmen and the US President, Donald Trump, in the White House, failed to yield any progress in talks aimed at ending the partial federal government shutdown.
On the economic front, according to the European Central Bank, the rate of growth in the Eurozone's money supply, as measured by the M3 monetary aggregate, slipped from October's clip of 3.9% to 3.7% in November (consensus: 3.8%).
Commenting on Thursday's figures, Claus Vistesen at Pantheon Macroeconomics said: "M1 appears to be stabilising at just under 7% year-over-year. If sustained, real M1 growth should increase in coming months as inflation eases, pointing to a slightly improved outlook for GDP growth towards the end of the year. The story for 2019 as a whole, however, is unchanged. Full-year growth is set to slow significantly."
Further afield, Norway's official statistics agency reported that the rate of unemployment held at 4% in October, the same as in September, although the rate of employment reached its highest in three years.