Global shares weighed by Apple demand worries, trade tensions

Oil slips as pessimism over supply resurfaces

NEW YORK, Nov 19, (Agencies): World stocks fell on Monday as worries about softening demand for the iPhone dragged down shares of Apple Inc and persistent trade tensions between China and the United States sapped investor sentiment.

Concerns about slowing economic growth also pushed down the dollar.

The U.S. benchmark S&P 500 stock index opened lower as shares of Apple and its suppliers fell. The Wall Street Journal reported Apple had cut production orders in recent weeks for the iPhone models it launched in September.

Renewed tensions between China and the United States also weighed. At an Asia-Pacific Economic Cooperative meeting in Papua New Guinea over the weekend, the issue prevented leaders from agreeing on a communique, the first time such an impasse had occurred in the group’s history.

The Dow Jones Industrial Average fell 335.06 points, or 1.32 percent, to 25,078.16, the S&P 500 lost 36.12 points, or 1.32 percent, to 2,700.15 and the Nasdaq Composite dropped 164.83 points, or 2.27 percent, to 7,083.04.

MSCI’s gauge of stocks across the globe shed 0.74 percent.

Reflecting growth concerns and the possibility that the Fed’s tightening cycle may soon end, the dollar dropped to a two-week low on Monday. The dollar index fell 0.25 percent.

In similar fashion, the 10-year U.S. Treasury yield has fallen from a recent top of 3.25 percent. Benchmark 10-year notes last rose 1/32 in price to yield 3.0701 percent, from 3.074 percent late on Friday.

In Europe, Renault SA shares helped push the STOXX 0.7 lower as Carlos Ghosn, the joint chairman of Renault and Nissan Motor Co, was arrested for alleged financial misconduct.

In commodity markets, gold found support from the drop in the dollar and added 0.1 percent to $1,222.76 an ounce. Oil prices gave up earlier gains as investors mulled the effectiveness of a potential cut in supply from OPEC and other exporters.

Brent crude was down 70 cents a barrel at $66.06. US crude futures traded 15 cents lower at $56.31 a barrel.

US stocks fell on Monday, as a slide in Apple’s shares on concerns about iPhone demand hit its suppliers and the technology sector, with mixed signals over the state of play between the United States and China on trade dispute adding to the weakness.

Shares of Apple Inc resumed its decline with a 3.5 percent fall after the Wall Street Journal reported the company has cut production orders in recent weeks for all three iPhone models launched in September.

The iPhone maker’s stock was down nearly 20 percent from a record high in October as a disappointing holidayquarter sales forecast and weak outlook from several of its suppliers, took the shine off a stock that has powered a rally in the decade-long bull-run for stocks.

Shares of Apple suppliers were also hit, with Lumentum Holdings Inc, Universal Display Corp, Cirrus Logic Inc and Skyworks Solutions Inc down between 2 percent and 7 percent.

Trading volumes were also thin in the holiday-shortened weekend ahead of Thanksgiving on Thursday and short trading session on Friday, which added a little bit of volatility to the markets, Frederick said.

The rest of the so-called FAANG stocks – Facebook Inc , Amazon.com Inc, Netflix Inc and Alphabet Inc – shed between 3 percent and 1.3 percent.

A 2.6 percent decline in technology shares and 1.3 percent fall in consumer discretionary stocks led eight of the 11 major S&P sectors lower.

The Philadelphia SE Semiconductor index dropped 1.9 percent, extending losses from the previous session after an underwhelming forecast from Nvidia Corp weighed on the sector.

At 11:22 am EDT the Dow Jones Industrial Average was down 261.76 points, or 1.03 percent, at 25,151.46, the S&P 500 was down 27.29 points, or 1.00 percent, at 2,708.98 and the Nasdaq Composite was down 131.51 points, or 1.81 percent, at 7,116.37.

Over the weekend, Asia-Pacific leaders failed to agree on a communique for the first time ever at a meeting in Papua New Guinea with US-China trade worries on the forefront.

US Vice-President Mike Pence said in a blunt speech on Saturday that United States will not back down from its trade dispute with China unless Beijing bows to US demands, dampening Friday’s trade optimism that was fueled by President Donald Trump’s comments.

Boeing Co and Caterpillar Inc, seen as trade sensitive stocks, fell 3.3 percent and 1.6 percent, respectively.

China’s JD.com Inc slipped 3 percent after reporting third-quarter revenue below analysts’ estimates on sluggish sales in its core e-commerce business. Declining issues outnumbered advancers for a 1.78-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.79-to-1 ratio on the Nasdaq.

European stock markets turned narrowly mixed in Monday afternoon trade after Wall Street opened weaker as the United States and China continued to joust over global trade, dealers said.

Europe’s major markets had opened firmer as traders shrugged off Brexit and Italy jitters but sentiment remained cautious.

Paris saw Renault shares tumble after reports its chief Carlos Ghosn had been arrested in Japan over alleged irregularities at Nissan, its long-term partner.

Wall Street meanwhile was down at the open, led by weakness on the hightech NASDAQ which shed more than 0.6 percent.

Asian markets earlier put in a solid performance. But “the political landscapes in the UK and Italy are still unsettled, and the US-China trade tensions rumble on,” CMC Markets analyst David Madden said.

In Paris, Renault was in the spotlight after long-term partner Nissan said it will ask its board to remove Ghosn as chairman after an inquiry uncovered “significant acts of misconduct” that included reporting less than he was earning in Japan and using company assets for personal purposes.

Renault’s share price plunged 12 percent at one point before recovering some lost ground to trade down more than nine percent at 58.52 euros in Paris.

Asian markets mostly rose Monday but investors were keeping a close eye on the China-US trade row after Donald Trump’s optimistic comments on a possible deal were offset by a war of words between his vice president and Xi Jinping.

The mood across the region was a little calmer at the start of the week, providing some much-needed support after the volatility of seven days ago, with oil stabilising and the Federal Reserve tempering fears about its plans for interest rate hikes.

Investors in Asia were in a buying mood Monday as they picked up bargains.

Hong Kong rose 0.7 percent and Shanghai added 0.9 percent while Tokyo ended 0.7 percent higher.

Seoul gained 0.4 percent and Taipei added 0.3 percent, with Manila jumping two percent as traders bet a rate hike last week by the Philippines’ central bank would help attract more foreign investment and temper inflation.

However, Sydney dropped 0.6 percent, Singapore slipped 0.7 percent and Wellington was off 0.2 percent.

Key figures around 0815 GMT - Tokyo - Nikkei 225: UP 0.7 percent at 21,821.16 (close)

Hong Kong - Hang Seng: UP 0.7 percent at 26,372.00 (close)

Shanghai - Composite: UP 0.9 percent at 2,703.51 (close)

Oil fell on Monday, surrendering earlier gains as investors weighed up the effectiveness of a potential cut in supply from OPEC and possibly other exporters in the face of rapidly rising global output.

Brent crude futures were down $1.04 at $65.72 a barrel at 1447 GMT, having retreated from a session high of $67.64. WTI crude futures fell $1.03 to $55.43 a barrel.

The Organization of the Petroleum Exporting Countries, led by Saudi Arabia, is pushing for the group and its partners to reduce output by 1 million to 1.4 million barrels per day to prevent a build-up of unused fuel.

“It appears that the market takes a production cut for granted. We’ll see if it is right after the next OPEC meeting on December 6. It is not unreasonable to anticipate stable prices until then,” PVM Oil Associates strategist Tamas Varga said.

Russian Energy Minister Alexander Novak said on Monday that Russia, which is not an OPEC member, planned to sign a partnership agreement with the group, and that details would be discussed at OPEC’s Dec. 6 meeting in Vienna.

“Oil prices rose (last week) on hope OPEC and partners, will act to reverse bearish sentiment, but from a technical set up, bear mode remains intact,” OANDA strategist Stephen Innes said.

Brent is almost 25 percent below early October’s 2018 peak of $86.74, as evidence of slowing demand has materialised and output from the United States, Russia and Saudi Arabia hit historic highs.

A US decision to grant waivers to some of Iran’s oil customers, who faced the prospect of a drop-off in supply from sanctions that came into force in early November, has also helped soothe concern about availability of crude.

A trade dispute between the United States and China is one reason investors are a lot warier about the outlook for oil demand growth next year.

Fund managers cut their bullish exposure to crude futures and options to the lowest since around mid-2017 this month.

The dollar dropped to two-week lows on Monday, pressured by cautious comments about the U.S.economy from Federal Reserve officials suggesting the central bank may be nearing the end of its tightening cycle. Against a basket of its rivals, the greenback fell to96.171, its lowest since Nov. 8, after falling nearly half a percent last week, its biggest weekly drop since late September.

The Fed has raised interest rates three times this year and is expected to raise its target again in December, to a range of2.25 percent to 2.5 percent. As of September, Fed policymakers expected to need to increase rates three more times next year, a view they will update next month.

The dollar has been the surprise winner of 2018, having risen nearly 10 percent from April lows thanks to a combination of interest rate hikes and strong economic data. But the growing view that US economic growth may have peaked has begun to erode the gains. The euro, meanwhile, rallied against the dollar despite concerns about negotiations between Brussels and Rome on Italy’s budget plans.

It was changing hands at $1.1454, up 0.3percent, after hitting two week highs earlier. Elsewhere, sterling remained in the spotlight with thecurrency expected to stay under pressure until the market gets more clarity on the progress of the Brexit deal. It rose 0.2 percent versus the dollar to $1.2862 after a 1 percent drop last week.