Published: Sat, January 05, 2019
Markets | By Erika Turner

Stock markets bounce back up as see-saw trading continues

Stock markets bounce back up as see-saw trading continues

While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, USA dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements. Apple's stock had fallen 32 percent from an October peak to its close of $157.92 Wednesday amid growing concerns about the iPhone.

South Korea's Kospi added 0.8 per cent. Japan's Nikkei 225 index fell 2.3 per cent on its first day of trading in 2019 as technology and electronics makers slumped on Apple's report that Chinese iPhone sales were slipping.

"We would anticipate the company increasing share buybacks on the weakness to return capital to shareholders at discount prices", said Trip Miller, managing partner at Apple shareholder Gullane Capital Partners.

The Dow rallied by 602.29 points, or 2.65 percent, to reach 23,288.51 an hour after the U.S. stock market opened.

Still, the market seemed to be caught off guard.

Earlier, in Europe, shares in fashion firm Burberry were almost 6 percent lower. Cook also noted supply constraints to new models of the Apple Watch, iPad Pro and AirPods.

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"Until it changes this pricing strategy, it is unlikely to see market share growth and will most likely see a gradual contraction as iPhone users upgrade at slower rates", said Richardson.

The statement from one of the world's largest companies will further rattle investors already anxious about the slowing Chinese economy.

On Wednesday, Apple said trade tensions had hurt consumer confidence. FedEx Corp., Starbucks Corp., Tiffany & Co. and Daimler AG are also finding it harder to sell their wares in the world's second-largest economy. While we don't have the exact numbers, it's likely that many iPhone customers made a decision to pay the $30 to extend the life of their current handsets rather than shell out hundreds of dollars for a new model.

Apple's first instance of revised earnings guidance since 2002 has the potential to rattle the financial markets as it puts the spotlight on China's woes and the dependence of the largest USA companies on strong growth in the world's second-largest economy.

"That is having an impact on earnings and it's not going to be just Apple", White House Chairman of the Council of Economic Advisers Kevin Hassett said in an interview with CNN. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week.

Goldman Sachs says Apple admitting that iPhone sales are declining is just the beginning of a longer drop, adding that further revisions to the earnings guidance are likely throughout the year. Services generated $10.8 billion in revenue for the quarter - a 27 percent increase from a year earlier. "It will be interesting to see how Apple shares react if there's a China trade agreement".

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