Sunday 20 January 2019

Apple Inc sneezed this week and global markets caught a cold

Feeling the bite: The Apple logo is displayed at one of the company’s stores in Hong Kong, after the company cut its revenue outlook for the first time in almost two decades citing weaker demand in China, triggering a slump for Asian suppliers and a wave of lower price targets on Wall Street. Photo: Bloomberg
Feeling the bite: The Apple logo is displayed at one of the company’s stores in Hong Kong, after the company cut its revenue outlook for the first time in almost two decades citing weaker demand in China, triggering a slump for Asian suppliers and a wave of lower price targets on Wall Street. Photo: Bloomberg
Adrian Weckler

Adrian Weckler

Global markets shuddered last week as Apple's revised revenue warning forced a closer look at the health of the world's second-largest economy.

An estimate by Chief executive Tim Cook that the company would likely see a lower-than-expected $84bn in revenue for its Christmas quarter, instead of the $89bn to $93bn previously projected by Apple, erased hundreds of billions from stock indices around the world.

Apple chief executive Tim Cook
Apple chief executive Tim Cook

A combination of harder trading conditions in China and lengthening upgrade was the reason for the unexpected dip in revenue, said Mr Cook.

Apple is often seen as a lightning rod for the technology and retail sectors, both pivotal in assessing economic sentiment.

Because its iPhones have the highest average selling price among smartphones, anything that disrupts their sale is greeted as being of wider economic significance.

However, the company is facing stiff competition from a new wave of Chinese smartphone manufacturers, especially Huawei and Xiaomi.

Meanwhile, market nerves were eased on Friday when stronger-than-expected US employment figures boosted shares.

"As nervous as we all were yesterday on this Apple news, maybe the consumer or the average person still is more confident than we are giving them credit for," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Apple is due to announce its quarterly results on January 29th. The company's share price rose by 4pc on Friday.

Irish Independent

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