➤ Apple's revenue warning weighs on global stocks.
➤ Dollar broadly weaker against majors; Japanese yen soars.
➤ Futures point to a lower opening for Wall Street.
➤ Split Congress to convene as partial government shutdown continues.
Stock markets across the globe came under pressure after Apple Inc. slashed its revenue guidance for the first quarter of fiscal 2019, citing weaker-than-expected iPhone sales, primarily in China.
Apple CEO Tim Cook said in a public letter to investors that the company now expects revenue for the quarter ended Dec. 29, 2018, of $84 billion, down from an earlier guidance of between $89 billion and $93 billion, adding: "While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China."
Shares in Apple, which closed 0.11% higher yesterday, plunged in extended trading after the revenue warning was released and were down nearly 9% to under $144 apiece as of 6:30 a.m. ET. While the trade dispute with China has yet to show a significant impact on the U.S. economy, "early signs may have emerged already after the lower Apple sales estimates were attributed mainly to lower Chinese purchases," Danske Bank Research said in a note.
The tech giant's woes weighed on Asian equities, with Hong Kong's Hang Seng index closing down 0.26%, the Shanghai SE Composite edging 0.04% lower and South Korea's KOSPI dropping 0.81%, while Japanese equity markets remain closed. Apple supplier Hon Hai Precision Industry Co. Ltd. lost 1.71% in Taipei and chipmaker SK Hynix Inc. tumbled 4.79% in Seoul, while AAC Technologies Holdings Inc. and Sunny Optical Technology (Group) Co. Ltd. shed 5.41% and 6.76%, respectively, in Hong Kong.
In Europe, France's CAC 40 dropped 1.44% as STMicroelectronics NV plunged nearly 10%, while Germany's DAX index lost 1.48%, led by technology stocks, with Infineon Technologies AG down more than 5% and SAP SE falling more than 3%. The FTSE 100 slipped 0.47% amid muted moves in its components, though British fashion retailer Next PLC rallied about 5% after it reported sales numbers for the Christmas trading period.
U.S. stocks, which managed to eke out gains after a late rally yesterday, are set to open lower this morning, with futures for the S&P 500 down 1.64% and the Nasdaq 100 down 2.70%. In the bond markets, Treasurys dipped as 10-year yields rose 2 basis points to 2.64% ahead of ADP's employment report and manufacturing data from the Institute for Supply Management.
Other safe-haven assets continued to gain traction amid the risk-off mood in equities, with gold rising 0.39% to $1,289.10 per ounce. The Japanese yen surged 1.22% to about ¥107.6 per dollar, having reached as much as about ¥109 earlier, with analysts pointing to thin liquidity and automated trading as factors for the jump.
In other currencies, the Australian dollar dipped 0.34% against its U.S. counterpart, while the British pound dropped 0.40% and the euro added 0.07% against the dollar. The dollar index, which measures the currency against a basket of peers, dropped 0.21% to 96.62.
Meanwhile, the partial shutdown of the U.S. government drags on as the new, split Congress prepares to convene later today. The Federal Communications Commission warned that should the shutdown persist, the agency would suspend most operations by midday, while the Food and Drug Administration's head also warned of limited services during the shutdown.
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The day ahead:
8:15 a.m. ET — U.S. ADP employment report (Econoday consensus: 175,000)
8:30 a.m. ET — U.S. jobless claims (Econoday consensus: 217,000)
10 a.m. ET — U.S. ISM manufacturing index (Econoday consensus: 57.9)
10 a.m. ET — U.S. construction spending (Econoday consensus: 0.2% monthly)
4:30 p.m. ET — U.S. Fed balance sheet and money supply