Opening Bell: Apple’s Reduced Outlook Hits Global Stocks; Yen Jumps

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  • Apple’s outlook cut sends global stocks and US futures tumbling lower
  • Global growth fears prompt flash crash in the Aussie
  • Yen, Treasurys gain on flight to safety
  • Oil’s rally fizzles out

Key Events

European shares and US futures contracts tumbled this morning, as Apple (NASDAQ:AAPL), which lowered guidance for the first quarter after US markets closed yesterday, exacerbated investor worries about a looming recession. Global growth fears also triggered a currency flash crash for the Australian dollar.

Contracts on the NASDAQ 100 lead the drop with a 2.9 percent dip, while those on the Russell attempted a climb before joining the downward trend. The STOXX Europe 600 sold off, with technology shares falling the most, as Apple dragged down both price averages and investor sentiment.

It was the first revenue warning in almost 12 years for the US tech giant, and the first quarter outlook cut in nearly 20 years, according to Bloomberg. The company cited an unexpected slowdown in China and fewer upgrades to its flagship iPhone line. The report re-ignites concerns over the long-term impact of the US-China trade war on the first synchronized growth in nearly a decade: softer corporate guidance suggests executives are not convinced about the positive rhetoric recently aired by presidents Donald Trump and Xi Jinping.

During this morning’s Asian session, regional indices ended mixed after Wednesday’s over 1 percent tumble. South Korea’s KOSPI (-0.81 percent) led the declines. The Shanghai Composite dropped 0.04 percent and Hong Kong’s Hang Seng was down 0.26 percent. Australia’s S&P/ASX 200 bucked the downward trend, rebounding 1.36 percent. Japan’s markets were closed.

Global Financial Affairs

Yesterday, US stocks managed to eke out a gain despite noticeable losses in futures contracts before the market open—when Chinese data showing contracting manufacturing activity had sparked global growth fears. Wednesday’s upbeat performance demonstrates a degree of resilient investor optimism even after equities posted their worst December since the Great Depression.

The S&P 500 gained 0.13%. Interest-rate sensitive Real Estate (-2.29%) shares weighed on the index, while Energy (+1.97%) rallied along with crude, which jumped by more than 4 percent yesterday after Saudi Arabia confirmed it had reduced exports.

The Dow Jones Industrial Average and the Russell 2000 crawled higher, 0.08 percent and 0.07 percent respectively, while the NASDAQ Composite edged 0.46 percent higher.

Opening Bell: Apple's Reduced Outlook Hits Global Stocks; Yen Jumps

UST 10-Year Daily Chart

Meanwhile, the yield on 10-year Treasurys tumbled toward 2.6 percent, the lowest level since February, drawing a pattern similar to that seen in stocks, wiping out all of last year’s gains.

Opening Bell: Apple's Reduced Outlook Hits Global Stocks; Yen Jumps

AUD/JPY Daily Chart

In currency markets, the Aussie slumped to the lowest level in almost 10 years against the yen, as algorithmic programs amplified sharp gyrations amid thin liquidity due to a Japanese holiday.

Opening Bell: Apple's Reduced Outlook Hits Global Stocks; Yen Jumps

USD/JPY Daily Chart

The yen, conversely, jumped on the broader market’s flight to safety.

The Dollar Index gained some ground but later slipped lower, after tumbling 4.36 percent to 104.96 yesterday—its lowest level since March.

Opening Bell: Apple's Reduced Outlook Hits Global Stocks; Yen Jumps

WTI Daily Chart

Elsewhere, West Texas oil slid below $46 a barrel again this morning, reversing a rally. Technically, even yesterday’s exuberant gains retreated within the bearish flag’s confinements.

Up Ahead

  • The US December jobs report is due on Friday
  • Fed Chair Powell will speak alongside predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association on Friday. Atlanta Fed President Raphael Bostic will also join a panel on long-run macroeconomic performance.

Market Moves

Stocks

  • The STOXX 600 fell 0.8 percent as of 8:18 a.m. London time to the lowest level in a week on the largest fall in a week.
  • Futures on the S&P 500 dropped 1.5 percent to the lowest level in more than a week.
  • The UK’s FTSE 100 fell 0.5 percent to the lowest level in a week on the largest fall in a week.
  • Germany’s DAX slipped 0.9 percent, reaching the lowest level in a week on the first retreat in a week.
  • The MSCI Emerging Market Index slid 0.6 percent to the lowest level in more than two months.
  • The MSCI Asia Pacific Index climbed 0.2 percent.

Currencies

  • The Bloomberg Dollar Spot Index slipped 0.1 percent.
  • The euro climbed 0.2 percent to $1.1364.
  • The British pound slid 0.4 percent to $1.2558, the weakest level in more than three weeks.
  • The Japanese yen surged 1 percent to 107.78 per dollar, the strongest level in more than eight months on the biggest jump in two weeks.

Bonds

  • Germany’s 10-year yield fell less than one basis point to 0.16 percent, the lowest level in more than 20 months.
  • Britain’s 10-yearyield dipped two basis points to 1.191 percent, the lowest in more than three weeks.
  • Italy’s 10-year yield gained four basis points to 2.728 percent, the biggest surge in almost two weeks.

Commodities

  • West Texas Intermediate crude dropped 2.2 percent to $45.50 a barrel, the first retreat in a week.
  • Gold advanced 0.4 percent to $1,289.25 an ounce, reaching the highest level in almost seven months on its sixth consecutive advance.

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