The ‘risk off’ nature of Tuesday’s trading was underscored by the fall in Treasury yields to one-month lows and gold rising for a fifth day to an all-time high of $2,141 per ounce.
There were several drivers behind the selloff, including weak U.S. service sector figures, caution ahead of Fed Chair Jerome Powell’s Congressional testimony on Wednesday, and a suspected arson attack at Tesla’s Gigafactory in Berlin.
Perhaps most alarming, however, was the report by research firm Counterpoint that Apple’s iPhone sales in China fell 24% year-on-year in the first six weeks of this year, during which time domestic rival Huawei saw unit sales rise by 64%.
This could fan fears of a slowdown in demand for the U.S. company, whose revenue forecast for the current quarter was $6 billion below Wall Street expectations. China, Hong Kong and Taiwan account for around a fifth of Apple’s total sales.
It is also a reminder of the trade tensions between the United States and China, which could intensify further if Donald Trump gets the keys to White House again and follows through on his pledge to slap huge tariffs on Chinese goods.
Investors will have noted official reports in China that Beijing is targeting annual GDP growth this year of around 5% and aims to increase defence spending by 7.2%.
Staying in China, struggling property developer China Vanke said it has funding in place to repay $630 million in dollar notes due next week, amid more selling pressure on its bonds as concern mounts over its liquidity.
China’s No.2 property developer by sales said the repayment process was “orderly”. But again, this is just a reminder of the deep hole China’s property sector is in.
