US stocks set for another big fall after Apple's warning

An investor monitors stock prices at a brokerage house in Beijing, Thursday, Jan. 3, 2019. Asian markets were mostly higher Thursday after tumbling more than 1 percent on the first trading day of 2019, as weaker-than-expected Chinese data exacerbated growth fears. (AP Photo/Andy Wong)
A man prepares to leave the brokerage house in Beijing, Thursday, Jan. 3, 2019. Asian markets were mostly higher Thursday after tumbling more than 1 percent on the first trading day of 2019, as weaker-than-expected Chinese data exacerbated growth fears. (AP Photo/Andy Wong)
In this Tuesday, Jan. 1, 2019, photo, a Chinese man uses iPhone to take picture as he prays for health and fortune on the first day of the New Year at Yonghegong Lama Temple in Beijing. Apple acknowledged that demand for iPhones is sagging, a warning likely to roil financial markets. It confirmed investor fears that the company's most profitable product has lost some of its luster. CEO Tim Cook said that iPhone sales fell well below projections, especially in China, amid a trans-Pacific trade war and concern over global economic weakness. (AP Photo/Andy Wong)
Investors monitor stock prices at a brokerage house in Beijing, Thursday, Jan. 3, 2019. Asian markets were mostly higher Thursday after tumbling more than 1 percent on the first trading day of 2019, as weaker-than-expected Chinese data exacerbated growth fears. (AP Photo/Andy Wong)

LONDON — Apple's shock warning that its Chinese sales are weakening ratcheted up concerns about the world's second largest economy and weighed heavily on global stock markets as well as the dollar on Thursday.

In a letter to shareholders on Wednesday, Apple CEO Tim Cook said iPhone demand was waning in China and would hurt revenue for the October-December quarter. In the letter, which was released after the markets closed, Cook said Apple expects revenue of $84 billion for the quarter, almost a tenth lower than the consensus expectation in financial markets.

Apple's warning, its first since 2002, deepened concerns about the Chinese economy, which had been showing signs of stress amid a trade war with the United States.

Shares in the company fell 7.6 percent to $146 in after-hours trading and U.S. stock markets were poised for further big falls at the open. Dow futures and the broader S&P 500 futures were down 1.4 percent.

Europe suffered similar declines, with Germany's DAX down 1.3 percent at 10,451 and France's CAC 40 declining 1.2 percent to 4,636. Britain's FTSE 100 was 0.4 percent lower at 6,709.

"For a while now there's been an adage in the markets that as long as Apple was doing fine, everyone else would be OK," said Neil Wilson, chief markets analyst at Markets.com. "Therefore, Apple's rare profit warning is a red flag for market watchers. The question is to what extent this is more Apple-specific, or more macro?"

Apple's warning couldn't have come at a worse time for stock market investors given the wipeout in late-2018, when many global indexes posted their worst performances in a decade amid concerns about the global economy and the prospect of further U.S. interest rate hikes.

In times of market stress and volatility, there are some assets that traditionally do well as investors perceive them as safer to hold.

The Japanese yen was one beneficiary of the stock market turmoil, posting its biggest gains against the dollar in over a year and a half. At one point, the yen was up 4.4 percent against the dollar, though market watchers said that was partly due to the triggering of automated orders that led to a "flash crash" during a holiday in Japan. The dollar later recovered somewhat to trade 1.1 percent lower on the day at 107.63 yen. Gold also rose, by 0.6 percent to $1,291 an ounce.

In Asia, tech-related stocks suffered most. South Korea's tech-heavy Kospi ended 0.8 percent lower at 1,993.70 while the Shanghai Composite index dropped less than 0.1 percent to 2,464.36. Hong Kong's Hang Seng gave up 0.3 percent at 25,064.36.

Some experts believe that the market volatility could eventually lead to changes in the policies that are concerning investors. The Fed, for example, could slow the pace of its interest rate increases if markets continue to drop. And U.S. President Donald Trump could become more open to settling the trade dispute with China.

"It is a well-known fact that Trump perceives the markets as a true barometer of his presidency," said Piotr Matys, a strategist at Rabobank International.

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