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Apple's shock warning sends investors to safe-haven assets

Apple's shock warning sends investors to safe-haven assets
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., January 2, 2019. REUTERS/Shannon Stapleton -
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SHANNON STAPLETON(Reuters)
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By April Joyner

NEW YORK (Reuters) - A revenue warning from Apple Inc <AAPL.O> rocked equity markets around the globe on Thursday as concerns over a damaging China-U.S. trade battle and its impact on world economic growth boosted assets considered safer investments, such as bonds and the Japanese yen.

Technology stocks led a selloff in Asian, European and U.S. stock markets after Apple, blaming weaker iPhone sales in China, cut its revenue forecast for the first time in nearly 12 years. Apple's U.S.-listed shares were last down 9.7 percent.

That heightened concerns that sluggish global growth may be reflected in the United States, where corporate earnings season is set to kick off in a few weeks.

Survey data from the Institute for Supply Management showed U.S. factory activity slowed more than expected in December, sending stocks on Wall Street lower.

Treasury yields fell and prices surged after the U.S. manufacturing activity data, extending overnight losses prompted by the Apple warning that sent investors fleeing to safe-haven instruments. The two-year Treasury yield <US2YT=RR> briefly dropped below 2.4 percent to reach parity with the federal funds effective rate for the first time since 2008.

Benchmark 10-year notes <US10YT=RR> last rose 29/32 in price to yield 2.5605 percent, from 2.661 percent late on Wednesday.

"The Apple pre-announcement has roiled the market ever since the news came out," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "People upset about the uncertainty surrounding global markets right now are looking for safety in Treasuries."

In the U.S. equity market, the Dow Jones Industrial Average <.DJI> fell 610.35 points, or 2.61 percent, to 22,735.89, the S&P 500 <.SPX> lost 55.63 points, or 2.22 percent, to 2,454.4 and the Nasdaq Composite <.IXIC> dropped 184.36 points, or 2.77 percent, to 6,481.58.

MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 1.24 percent.

CURRENCIES

Apple's news also unsettled the currency markets, with the safe-haven yen climbing against the dollar <JPY=>. The dollar was last 1.02 percent lower against the yen at 107.76 yen.

Earlier, in what some market watchers called a "flash crash," the yen rose as much as 4.4 percent versus the dollar after a flurry of automated orders triggered a massive move in Asia, where trade was thin with Japanese participants still away for the New Year holiday.

The dollar index <.DXY>, measuring the greenback against a basket of six other currencies, was last down 0.5 percent. The euro <EUR=> rose 0.44 percent against the dollar to $1.1392.

Keeping with the risk-off theme, gold prices hit a 6-1/2-month peak. Spot gold <XAU=> last added 0.7 percent to $1,293.24 an ounce.

Copper prices <CMCU3> dropped to an 18-month low and ended 1.8 percent lower at $5,736 a tonne.

Yet Brent crude <LCOc1> futures rose $1.04, or 1.89 percent, to settle at $55.95 a barrel. U.S. crude <CLc1> futures rose 55 cents to $47.09 a barrel, a 1.18 percent gain.

Currency Flash Crash: https://tmsnrt.rs/2RvrCQi

(Reporting by April Joyner; Additional reporting by Andrew Galbraith, Josephine Mason, Helen Reid and Saqib Iqbal Ahmed; Editing by Bernadette Baum and Chizu Nomiyama)

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