Europe midday: Stocks under water as tech rout extends

Stocks across the Continent continue to be mired in the red after Apple warned after the close of trading in New York that its sales over the next few months are set to sharply undershoot forecasts.

Shares of the global bellwether for technology stocks were pumeled by nearly 8% in 'after hours' trading on Wall Street, taking their drop over the past three months to over 30% and setting-off a wave of risk aversion that drove sharp moves in even the largest currency pairs, with the US dollar at one point crashing by roughly 3.7% versus the Japanese yen.

Commenting on the moves overnight in financial markets, Accendo Markets's Michael van Dulken told clients: "Apple's overnight sales warning specifically pointed to China contributing most of the expected shortfall for iPhones, Macs and iPads. This adds fuel to the fire of concerns about slowing global growth and/or a trade war, and compounds this week's China PMI Manufacturing misses.

"[...] Automated algo rotation into safe-haven of Japanese Yen, made worse by low post-holiday Asian volumes, led to a flash crash in most of the main currencies (USD, EUR, GBP). Although the Pound is now off its worst levels, weakness is helping the FTSE cushion yesterday's Tech blow."

Against that backdrop, as of 1234 GMT the benchmark Stoxx 600 was trading lower by 0.61% or 2.06 points to 335.17, alongside a drop of 1.19% or 126.31 points to 10,453.58 for the German Dax and a decline of 1.11% or 51.95 points to 4,637.67 for the Cac-40.

Unsurprisingly, the biggest drag in stockmarkets was coming from technology issues, with the Stoxx 600 sector gauge retreating by 3.60% to 377.82. Shares of chip makers were knocked lower as Apple's warning reverberated throughout the sector, with stock in ASML down by 4.18% and Infineon retreating 5.56%.

After the closing bell on Wall Street, Apple chief, Tim Cook, told investors he expected the company's first quarter sales to clock-in at approximately $84bn, which was significantly less than the range of between $89bn to $93bn that the company had guided towards previously.

Cook blamed weaker demand for iPhones and slower growth in China for the lowered guidance.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," the executive said.

Nevertheless, while not all analysts were quite as upbeat, there was also some talk in markets to be heard regarding the prospect for economic stimulus in China, with those at Danske Bank saying: "We look for US-China deal in next 3-6 months to remove a key headwind. We also expect further stimulus coming soon (big tax cut to both consumers and companies and one or more reductions in the reserve requirement ratio)."

Meanwhile, in the background, a meeting between top Democratic and Republican congressmen and the US President, Donald Trump, in the White House, failed to yield any progress in talks aimed at ending the partial federal government shutdown.

On the economic front, according to the European Central Bank, the rate of growth in the Eurozone's money supply, as measured by the M3 monetary aggregate, slipped from October's clip of 3.9% to 3.7% in November (consensus: 3.8%).

Commenting on Thursday's figures, Claus Vistesen at Pantheon Macroeconomics said: "M1 appears to be stabilising at just under 7% year-over-year. If sustained, real M1 growth should increase in coming months as inflation eases, pointing to a slightly improved outlook for GDP growth towards the end of the year. The story for 2019 as a whole, however, is unchanged. Full-year growth is set to slow significantly."

Further afield, Norway's official statistics agency reported that the rate of unemployment held at 4% in October, the same as in September, although the rate of employment reached its highest in three years.

For later in the session, and ahead of Friday's monthly jobs report in the States, the focus was expected to be on other key US labour market indicators, including consultancy ADP's private sector payrolls figures covering the month of December and weekly unemployment claims data.