European stocks and US equity-index futures slumped after Apple added to global growth concerns with a cut in its sales outlook. Stocks in Asia were mixed, while there were wild moves in the currency markets as the yen surged.
Technology shares led the Stoxx Europe 600 Index lower after the iPhone maker cut its first-quarter guidance for the first time in almost two decades, citing an unforeseen slowdown in China and fewer upgrades to its flagship mobile device. Contracts on the Nasdaq index led the drop for US futures, dipping as much as 2.9 per cent.
In currency markets, the yen jumped and the Australian dollar slumped to the lowest in almost 10 years as algorithmic programs amplified sharp gyrations amid thin liquidity during a Japanese holiday. Treasuries were steady, while most European bonds climbed.
Apple's warning and a weak reading on Chinese manufacturing come as stark examples to investors that the protectionist showdown is starting to have an impact on economic activity, even after US President Donald Trump sounded positive tunes about reaching a trade deal with his counterpart Xi Jinping over the weekend. In Washington, leaders were unable to strike a deal to end a partial shutdown of the federal government at a meeting Wednesday, adding to the gloom that's gripped markets for the past month.
"That Tim Cook and his company mentioned China as the reason behind the downturn in the company's outlook seemed to hit exactly the pressure point traders and investors were already alarmed over," Greg McKenna, markets strategist at McKenna Macro and a three-decade foreign-exchange market veteran, wrote in a note to clients. "That is, the China and global slowdown which seems to have been confirmed by Wednesday's global manufacturing PMI data."
Elsewhere, oil retreated from a two-week high as risk appetite faltered after a revival of investor fears over the health of the global economy.
Futures in New York decreased 2 per cent, paring most of the previous session's gains spurred by signs that Opec got an early start on its pledged output curbs.
While Opec’s output plunged by the most in almost two years last month, investors remain wary over the effectiveness of the group’s strategy as America pumps at a record pace.
“Commodities including oil are getting hammered on signs of slowing growth in China after the release of weak economic data as well as Apple’s lowered revenue outlook,” said Sungchil Will Yun, a commodities analyst at HI Investment and Futures Corp. “While Opec is said to have reduced output last month, concerns over growth have outweighed everything.”
West Texas Intermediate for February delivery dropped as much as 2.5 per cent to $45.39 a barrel on the New York Mercantile Exchange, and was at $45.59 at 8.09am in London. The contract settled $1.13 higher at $46.54 on Wednesday. Total volume traded was about 55 per cent above the 100-day average.
Brent for March settlement was 71 cents lower at $54.20 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude climbed 2.1 per cent to $54.91 on Wednesday. It traded at a premium of $8.28 to March WTI. – Bloomberg
