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Apple revenue dip causes shocks in currencies

Investors rush to safe havens as the US tech giant revises down its revenue forecast, raising further concerns over a global economic slowdown.

Dollar weakens on Fed’s dovish outlook

The Japanese Yen has surged as the Dollar and the wider financial markets have taken the brunt from Apple’s revenue warning, with the company’s shares falling by as much as 7.5 per cent in after-hours trading in the US.

The US tech giant blamed it on lower-than-expected sales and a sharp slowdown in Chinese demand as a result of ongoing trade tensions with Beijing. Seen as a safe haven during market uncertainties, at one point the Yen gained over 3 per cent against the Dollar.

Apple’s shock announcement has also had a ripple effect on Sterling as investors rushed to other safe havens, sending the UK currency to April 2017 lows of 1.2455 against the Dollar before recovering to the mid-1.25s.

Fears of a global slowdown are trickling into Europe. The European Purchasing Managers’ Index (PMI) showed contraction in France and Italy, as well as a drop in confidence in Germany.

The Italian economy has also raised further concerns as the European Central Bank (ECB) announced the appointment of temporary administrators at Banca Carige. The Italian lender failed to protect against future collapses in December, with shareholders not willing to support the issuance of €400 million’s worth of bonds to bolster the bank’s cash position. New figures indicated that Italy is close to recession despite agreeing a new budget with Brussels.

Across the pond, US President Donald Trump and congressional Democrats failed to reach an agreement on border security funding yesterday, 2 January. The US government shutdown looks likely to continue for the third week if no common ground is found on tomorrow, 4 January.

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