Share prices across the world’s stock markets have fallen after Apple released poor trading figures and announced a sharp drop in US factory orders leading to fears of a global economic slowdown.
Following Apple’s first revenue warning since 2002, 9% of its value was wiped off on trading in Wall Street. Apple blamed weaker growth particularly in China.
Apple’s announcements led to widespread share selling in Asian and European markets where both France and Frankfurt saw a drop of more than 1.5% in share indices. The FTSE in London closed 41.57 points lower.
And it looks like Apple’s woes are not going away any time soon. Trader Goldman Sachs raised the possibility that Apple could be heading in the same way that saw Nokia go from having the largest share in mobile phone making to forced to sell its loss-making division in 2013.
The fall in Apple’s value was triggered when its chief executive Tim Cook admitted that lower than expected sales in China had taken the company by surprise.
We see the potential for further downside to full year 2019 numbers depending on the trajectory of Chinese demand in early 2019.- Rod Hall: Analyst, Goldman Sachs
Part of the problem is the ongoing tariff trade war between the US government and China. And recently, Donald Trump’s chief economic advisor warned that not only Apple would be a casualty.
Recent figures released show that American manufacturing new orders fell by 11 points. The largest drop in five years. Companies supplying components for Apple were also hit. Cardiff-based chip manufacturer IQE for instance saw its value drop by 6%.
Apple reiterates worries that China and trade issues have not been resolved. People are worried that if a big name such as Apple has to report a decline in earnings, who else can be protected from something like that.- Robert Pavlik: chief investment strategist, SlateStone Wealth LLC
Apple’s woes began almost at the same time that they peaked globally when they became the world’s first trillion-dollar enterprise. From that moment it has been downhill with last week’s announcement that Google-owner Alphabet overtook them as the world’s third-largest listed company.
Without doubt the global mobile phone market is becoming a mature one. Three-fifths of Apple’s sales are iPhones and it has become inevitable that there are just not enough consumers to maintain their growth. Hence Apple looking to emerging markets such as China.
Despite this Apple continues to be innovative and spends huge amounts on research and development which should throw-up new products. Nevertheless, Apple’s downturn has led to sleepless nights among the titans of capitalism.