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European, Asian shares advance on hopes for U.S.-China talks

07 January, 2019, 06:12 | Author: Shawna Walton
  • An iPhone XS from left iPhone XR and the iPhone XS Max can be seen in New York. Apple warns that disappointing iPhone sales will cause a significant drop in its revenue over the crucial holiday season compared to earlier projections. CEO Tim Cook made

On Wednesday, Cook cut the revenue guidance for the iPhone, iPad, Macbook and digital services for Q1 2019 ending December to $84 billion, down from $91 billion. It was its first forecast slash in more than 15 years.

But some analysts cautioned that Apple's troubles may be more company specific than global in nature.

"As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed", Cook said Wednesday in a letter to investors.

Greater China is an informal term usually used by multinational companies to refer to their business operation area that encompasses the Chinese mainland, Taiwan, Hong Kong and Macau.

Beyond Apple, investors were also rattled by the biggest one-month decline in U.S. factory activity since the Great Recession. It's the result of market competition, rather than economic deceleration.

Gains in tech-related names also boosted the broader market. Retailers and internet companies rose as well, with Amazon up 5.3 per cent at $1,580 and Google's parent company, Alphabet, rising 4.7 per cent to $1,073.

However, Cramer, whose charitable trust owns shares of Apple, says he likes the stock over the long term.

Although non-phone categories, including the Mac, Apple Watch and iPad, grew 19 per cent worldwide, Cook noted that more than 100 per cent of the company's fourth quarter year-over-year revenue decline occurred due a drop in Chinese sales of iPhones and other Apple product.

Shanghai - Chinese telecom giant Huawei has punished two employees for posting a New Year greeting on the company's official Twitter account using an iPhone made by arch rival Apple, an internal memo showed. That reversal of fortune could reinforce fears of a global economic slowdown.

Riskier stocks led the rally, including tech companies that have gotten killed lately: Facebook (FB) rose 5%, Apple (AAPL) was up 4% after its worst day in six years.

Many analysts and investors had anxious about a slowdown in iPhone sales since the company said in November it would stop disclosing unit sales data for its phones and other hardware products. The yield on 10-year U.S. Treasurys, meanwhile, was last up to 2.584% from 2.557% late Thursday.

"China's economy began to slow in the second half of 2018".

Now China and the United States face a key March deadline for talks to end the damaging trade war, or Washington could proceed with a sharp hike in USA tariffs on Chinese goods originally set for January 1 and Beijing could retaliate.

"Apple is a barometer for United States tech stocks", Ives said. ADP said on Thursday that the United States added 271,000 private-sector jobs in December, easily topping estimates.

At 6:26 a.m. ET, Dow e-minis were down 371 points, or 1.59 percent.

Apple shares were down 9.8 percent at $142.40. Moreover, General Motors sells more vehicles in China than in North America from 2015 to 2017 and its yearly sales in China accounted for 42.09 percent of the company's total.

Another question mark for Apple is its 5G strategy in China, where the USA firm is not expected to have a 5G-enabled phone until 2020, behind rivals like Huawei, Xiaomi Corp and Samsung Electronics.

With over 20 factories, multiple research and development centers as well as logistics and parts centers, heavy equipment maker Caterpillar employs over 10,000 people in China, accounting for over 10 percent of its total employment.

Markets were also upbeat in Asia, where the Shanghai Composite Index, the Shenzhen A-Share, and the Hang Seng all rose by more than 2%.

Market participants were awaiting nonfarm payroll numbers due out later Friday for further clues on the health of the USA economy.



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