The shares of Wall Street have dropped as a response to the warning of Apple regarding a slowdown in China.
All three major indices in the United States plunged on opening as the nine percent declined of Apple caused another painful day for the investors.
The tech giant said that the lower demand for its products in China and the economic deceleration of the country were to blame for the release of its second revenue warning late last night.
The Dow Jones plunged by more than 650 points and 2.8 percent. It was followed on the downward spiral by the Nasdaq which was down by 2.8 percent and the S&P 500 which was down by 2.4 percent.
The S&P technology sector dropped 3.5 percent, with chipmakers, which include both Apple and China as thier major customers, weighing the iPhone
iPhone suppliers including Advanced Micro Devices, Skyworks Solutions, and Qorvo dropped by more than 7 percent.
The selloff spread to the FTSE 100, which fell 0.6 per cent and to European markets, as the Eurostoxx dropped 1.2 per cent.
Luxury retailers were also affected by the warning of Apple regarding the Chinese slowdown as some analysts said that investors were concerned that consumers in China may lose their appetite for high-end brands.
Tiffany & Co fell by 4.2 percent while Ralph Lauren dropped by 3.2 per cent.
Burberry was considered as the second biggest fallers of the FTSE 100, declining by 5.3 percent, and the shares of Mulberry slid by 3.5 per cent.
David Madden, CMC Markets analyst, stated: “Investors are fearful the Chinese middle class might lose their appetite for Western luxury brands.”
Russ Mould, an analyst at AJ Bell, said that mining companies and other firms that are “reliant on Chinese consumption” were affected this morning by the warning of Apple.
The FTSE 100 was trading at 0.6 per =cent down in the afternoon as the markets of the United States dragged the index down from a position of parity.
Next led the risers of the index, jumping by five percent on strong Christmas sales, followed by Tesco which soared by 3.8 per cent.
Marks and Spencer, Associated British Foods, and AstraZeneca made up the top five.
The company that recorded the largest fall was Evraz, the steel and mining company, which fell by seven percent. Both are followed by Burberry, Intertek Group, Antofagasta and Scottish Mortgage Investment Trust.