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Markets fall after bite of Apple's poison

This article is more than 12 months old

Tech giant's first revenue caution in almost 12 years drags STI down 0.9 per cent, or 26.01 points, to close at 3,012.88

It turns out that all it takes is one spoiled Apple to knock out the markets.

The tech giant's first revenue caution in almost 12 years - on slowing Chinese demand - sparked chaos in currency markets and dragged the Straits Times Index (STI) in Singapore down 0.9 per cent or 26.01 points. Slowing global growth and risk aversion among investors also factored into the STI closing at 3012.88.

Other Asian markets struggled as well, with Hong Kong, China and South Korea all ending lower on the day.

In particular, South Korea's benchmark Kospi index slumped to a two-month low, ending the day down 16.3 points or 0.81 per cent at 1,993.7.

On the other hand, Australia's S&P/ASX 200 index added 1.4 per cent on the day to close at 5,633.4 as a cheaper Aussie dollar gave more value to export-oriented listings like gold mining stocks.

Malaysia's market also closed higher on the day.

Japanese markets remain closed for the new year and will resume trading today.

Of the 30 STI constituents, 24 counters ended the day in the red. Turnover on the bourse stood at roughly 1.16 billion securities worth $886 million, which worked out to an average unit price of $0.76 per security. Decliners outnumbered advancers 218 to 154.

The key market event in the morning was a "flash crash" in currency markets triggered by Apple's revenue warning when orders came in to sell the Australian dollar and Turkish lira against the Japanese yen.

This also resulted in the yen being markedly higher against the US dollar even though the greenback appreciated against other Asian currencies while investors also rushed to gold.


IG market strategist Pan Jingyi noted: "Quite some attention went to the yen surge with the low liquidity-induced move surprising the market.

"The keenness to get hold of haven assets had been registered after Apple fuelled further risk aversion, though the sharp move itself highlights the volatile environment we are currently navigating."

Index-listed ThaiBev was the Singapore bourse's most actively traded stock on the day. The food and beverage player dropped $0.015 to close at $0.59 with 38.2 million shares changing hands. Other actives included Ezion Holdings and KLW Holdings.

The biggest gainer on Singapore's blue-chip index was Jardine Cycle & Carriage, which closed $0.52 or 1.5 per cent higher at $35.28.

CMC markets' market analyst Margaret Yang told BT: "Overall sentiment is 'risk off', as defensive sectors such as food and beverage, real estate investment trusts and consumer staples outperformed cyclical ones like technology, financials and industrials."

Apple's revenue cut, which weighed on the overall sentiment of technology and semiconductor counters globally saw Venture Corp shares close $0.25 or 1.8 per cent down at $13.51. Semiconductor player UMS Holdings extended its slide, shedding a further $0.015 or 2.6 per cent to close at $0.555, its lowest in just under two years.

Among financials, DBS Group Holdings ended $0.40 or 1.7 per cent down at $23.09, its lowest since late November.

Meanwhile, OCBC Bank finished $0.07 or 0.6 per cent lower at $11.03, and United Overseas Bank dropped $0.32 or 1.3 per cent to close at $23.99.

Global sentiment is crumbling as investors are increasingly concerned about the slowdown in consumer spending in China, Ms Yang said.

That slower spending could mean that the impact of US President Donald Trump's trade war with China may have started to erode US corporate earnings during the recent holiday season.

"Trump's trade tariffs on China may prove to backfire," she said.

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