NEW YORK – Global stocks slumped on Thursday, as United States futures pointed to heavy losses and the Japanese yen soared after Apple Inc. announced a rare cut to its sales forecast.
Futures put the Nasdaq Composite, which is heavily weighted toward information technology companies, on course to fall 2 percent, with the S&P 500 and Dow Jones Industrial Average on course to slide 1.4 percent at the opening bell.
In premarket trade, shares in Bristol-Myers Squibb were down 14.7 percent after the pharmaceuticals company announced plans to buy cancer drugmaker Celgene for roughly $74 billion.
Apple shares, meanwhile, were trading down 8.4 percent before the open, with stocks exposed to the tech giant leading indexes lower around the world. In Europe, Austrian semiconductor manufacturer AMS AG plummeted 19.6 percent, dragging the Stoxx Europe 600’s tech sector down 3.4 percent. The pan-continental index was down 0.6 percent in early-afternoon trading.
It was a similar story in Asia, where tech-dominated benchmarks were among the heaviest fallers. The Shenzhen A-Share slipped 0.8 percent and Taiwan’s Taiex was down 0.7 percent. Apple competitor Samsung Electronics Co. dropped 3 percent, dragging the South Korean Kospi down 0.8 percent.
Apple slashed its quarterly revenue forecast for the first time in more than 15 years Wednesday, in a move prompted by ebbing iPhone sales in China.
A signal of economic gloom in the world’s second-largest economy, Apple’s move followed a batch of pessimistic sentiment indicators earlier in the week.
“This move from Apple shows you that investors are finding it difficult to hide,” said Roland Kaloyan, head of European equity strategy at Societe Generale. “There are two main reasons for the move: First, numbers from China have put fears in the market about growth for this year, and second, the impact on US companies of a stronger dollar.”
The US dollar plunged 3.7 percent against the Japanese yen after Apple’s forecast cut, although that fall recently had softened to 1.1 percent. Haven metal gold was last up 0.5 percent at $1,290.20 troy ounce, and the yield on 10-year US Treasurys was last 2.644 percent, down from 2.659 percent late Wednesday. Yields rise as prices fall.
The impact of the surprising news out of Silicon Valley was magnified by thinner-than-normal trading volumes during a holiday in Japan, and combined with rising bets on a pause in Federal Reserve interest-rate increases during 2019 to prompt investors to favor assets perceived as less risky.
Fed-funds futures, which investors use to bet on Fed policy, showed on Wednesday a 91 percent probability it will either hold or cut rates this year. That marked a sharp reversal from the 90 percent probability from early November that rates would rise.
The WSJ Dollar Index, which measures the US currency against a basket of 16 others, was last down 0.1 percent, eroding its year-to-date gains to 0.4 percent.
Rate increases and balance-sheet tightening from the Federal Reserve during past years have been key factors behind the increase in recent market volatility, although gentler monetary policy this year should be less unsettling for markets, some economists say.
Despite rising jitters among global investors about slowing Chinese growth, US growth has remained relatively robust, and the country may be relatively insulated from sagging growth elsewhere, according to Ward McCarthy, chief financial economist at Jefferies.
“The economic conditions in China have a more profound impact on US inflation than they do on US growth,” McCarthy said. “We’d feel some pain from a global slowdown but the slowdown in Chinese economic activity does not represent the same type of threat to the US economy that it does to other economies.”
Elsewhere, investors were keeping one eye on US politics, with the Democrats due to take control of the House of Representatives on Thursday.
House Democrats plan to put forward a package of spending bills that would lift most of the continuing government shutdown through September, as well as a short-term extension to Department of Homeland Security funding. Senate Majority Leader Mitch McConnell, however, said Wednesday the Senate wouldn’t take up the House Democratic spending package.
In commodities, Brent crude oil reversed early losses and was last up 1.3 percent at $55.61 a barrel, with West Texas Intermediate futures up 0.6 percent at $46.80 a barrel.