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Apple’s shock profit warning sends European shares sliding

Apple’s shock profit warning sends European shares sliding

Apple’s shock downgrade has sent shares in European-listed companies with exposure to China – from Burberry and the Gucci owner, Kering, to chipmakers and miners – tumbling over fears the slowdown that has hit the Silicon Valley giant is set to spread. The luxury clothing and accessories maker Burberry, which generates substantial sales from Chinese…

Apple’s shock downgrade has sent shares in European-listed companies with exposure to China – from Burberry and the Gucci owner, Kering, to chipmakers and miners – tumbling over fears the slowdown that has hit the Silicon Valley giant is set to spread.

The luxury clothing and accessories maker Burberry, which generates substantial sales from Chinese shoppers, was among the biggest early fallers in the FTSE 100, losing more than 3% as the contagion of Apple’s surprise profit warning citing the “magnitude” of the economic slowdown in China spreads to European markets.

Kering, the Paris-based owner of brands including Gucci, Yves Saint Laurent and Alexander McQueen, fell 2.7%, while the Swiss watchmaker Swatch tumbled 3.5%.

The stock value of mining and steel companies, many of which are heavily influenced by the Chinese market, took a major hit. Roman Abramovich’s steel and mining business Evraz was the biggest faller in early trading on the FTSE 100, down 4.3%. Antofagasta Holdings fell 2.3% while Anglo American dropped 1.3%, Rio Tinto slipped 1.6%, Glencore fell 1.2% and BHP dropped 1.5%.

European suppliers to Apple have been hit hard, with the London-listed, Cardiff-based chip manufacturer IQE down 4%. The Newcastle-based software firm Sage fell 1.6%.

Across Europe, Dialog Semiconductor, STMicroelectronics and BE Semiconductor fell down 8%, 7% and 3% respectively. The Austrian chipmaker AMS had more than a fifth wiped off its stock value.

On Wednesday Apple downgraded its sales forecast for the final three months of 2018, its most important period of the year, by up to 10% compared to previous guidance.

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The company, which temporarily halted trading in its shares as the chief executive, Tim Cook, issued a letter to shareholders explaining the situation, has not issued a profit warning since 2002. The company’s shares fell 8% in after hours trading on Wall Street.

The move came the same day it was reported that factory activity in China contracted for the first time in 19 months in December.

China’s economy has also been pinched by the trade war with the US, which is spilling over into other Asian economies.

China is Apple’s third-largest market after the US and Europe.

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