It’s not often an announcement from a company can induce a big move in currency markets, but it just happened — and in a big way.
Apple’s announcement that it has had a bad quarter and some shock results in China are partly to blame has rattled markets, and the Australian dollar had a bit of a meltdown in the process.
Already weak after falling through the US70c mark this morning for the first time in three years, the Apple news sent it plummeting to its lowest level since 2009.
It plunged through US69c, trading as low as 0.6830 before recovering some of the losses. A short time ago it was trading at 0.6876.
The move against the yen was even more violent, with the Aussie outright crashing against the Japanese currency by over 5% at one point.
After a small rise in US stocks overnight, futures are now tumbling, with Dow futures down over 100 points a short time ago.
In an investor letter, Apple CEO Tim Cook wrote that the company “did not foresee the magnitude of the economic deceleration” in emerging markets, “particularly in Greater China.
“In fact, most of our revenue shortfall to our guidance, and over 100 per cent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad,” Cook wrote.
“China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. 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 added.
The prospect that China’s economic performance is deteriorating more rapidly than anticipated is one of the big concerns for global markets heading into the start of the year. Today’s update from Apple follows survey data released earlier this weak showing the country’s manufacturing sector unexpectedly contracted last month.
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