'Flash-crash' hits Asia currency markets on Thursday morning

Automated guided vehicles transport containers at an automated container terminal in Qingdao port Shandong province China Jan. 1 2019. Reuters

Automated guided vehicles transport containers at an automated container terminal in Qingdao port Shandong province China Jan. 1 2019. Reuters

USA stock index futures fell sharply on Thursday after Apple Inc stunned investors with its first sales warning in more than a decade, deepening fears about a slowdown in China's economy and its impact on corporate profits. Apple now expects revenue of $84 billion for the quarter, about 9 percent lower than the $91.3 billion estimate from analysts polled by FactSet. The company's shares fell 7.6 percent to $146 in after-hours trading.

The Dow Jones Industrial Average fell 318.89 points, or 1.37 per cent, shortly after the open to 23,027.35.

US stock futures pointed to another rough start on Wall Street, with Nasdaq E-mini futures NQc1 down 2.6 percent and S&P 500 E-mini futures ESc1 off 1.6 percent.

USA crude dipped 1.31 per cent at US$45.93 (RM189.74) a barrel after a sharp rise yesterday.

'This provides solid evidence of how slowing economic growth and a trade war make the best death cocktail for sentiment, ' said Naeem Aslam, chief market analyst at Think Markets UK Ltd in London.

The Chinese government reported in October 2018 that the country's economy had grown by just 6.5 percent over the financial quarter ending in September-the slowest rate since the beginning of 2009, in the wake of the global financial crisis. "Therefore, Apple's rare profit warning is a red flag for market watchers".

US stock index futures fell sharply on Thursday after Apple Inc stunned investors with its first sales warning in more than a decade.

Apple's warning couldn't have come at a worse time for stock market investors given the wipeout in late 2018, when many global indexes posted their worst performances in a decade amid concerns about the global economy and the prospect of further USA interest rate hikes.

The US dollar climbed against the euro and sterling on Wednesday, starting the new year on a strong footing, but fell against the safe-haven Japanese yen as investors remained wary of slowing global growth and volatile equity markets. Chipmakers, which count both Apple and China as major revenue generators, led the decliners in early premarket trading, while trade bellwethers Boeing Co and Caterpillar Inc dropped over 2 percent.

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However, U.S. futures pared some losses after the ADP National Employment Report showed private sector jobs rose far more than expected in December.

Apple's warning on China has the potential to weigh heavily on a wide variety of companies.

Amid the flight to perceived safety, the yield on benchmark 10-year Treasury notes fell to 2.6328 per cent compared with its United States close of 2.661 per cent yesterday.

Europe suffered similar declines, with Germany's DAX down 1.3 percent at 10,451 and France's CAC 40 declining 1.2 percent to 4,636. The dollar later recovered somewhat to trade 1.1 percent lower on the day at 107.63 yen.

Chinese stocks were lower with the Shanghai Composite index falling almost 1 percent to finish its trading day at 2,464.36, while Hong Kong's benchmark Hang Seng was down 0.3 percent. In Asia, tech-related stocks suffered most.

The euro was flat, buying US$1.1342, and the U.S. dollar index, which tracks the USA currency against a basket of major rivals, was 0.15 per cent weaker at 96.733. Oil prices have nosedived nearly 40 percent since early October, and investors' fears about falling demand in China and elsewhere were a key reason for the decline. The euro was down marginally at $1.1340.

China's economy remains of major concern for markets after a measure of its manufacturing activity shrank for the first time in 19 months in December, hit by the Chinese-U.S. trade war, with the weakness spilling over to other Asian economies.

"It is a well-known fact that Trump perceives the markets as a true barometer of his presidency", said Piotr Matys, a strategist at Rabobank International.

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