Pound tumbles against dollar and euro as Apple profit warning sparks fears for global economy

European stocks also down and US markets on track for hefty losses after tech giant’s sales disappoint

The pound tumbled on Thursday as investors reacted to a surprise profit warning from Apple that served to heighten worries about the global economy.

European stocks were also down and US markets were on track for hefty losses when Wall Street opened after Apple issued a revenue warning for the first time in almost two decades.

The tech giant blamed a large and unexpected drop-off in smartphone sales in mainland China, Taiwan and Hong Kong, a region that has been the engine of global growth in recent years.

Fears that the world’s second-largest economy is slowing down more abruptly than had been thought amid trade tensions with the US sparked an exodus from riskier assets.

Investors switched their money into safe havens such as the Japanese yen, sending sterling – which is already suffering from the political turmoil surrounding Brexit – down to its lowest level against the dollar since April 2017.

Sterling dropped in a sudden “flash crash” in Asia on Thursday as automatic trading triggered sell-offs. The UK currency fell to as low as $1.2409 overnight before regaining ground to trade 0.3 per cent down at $1.2575. The pound was down 0.55 per cent against the euro at €1.1051.

News of Apple’s woes delivered a battering to its suppliers with power chip maker Dialog Semiconductor down 5.7 per cent in Frankfurt. AMS AG, which makes light sensors for smartphones, crashed 17.4 per cent.

Ripples were felt throughout the wider technology sector which will also be hurt by any global downturn. Apple’s biggest rival Samsung slipped 3 per cent in Seoul while tech shares dragged European markets lower.

The Stoxx Europe 600 Index fell 0.5 per cent in early trading while in the US the Dow Jones Industrial Average was on course for a heavy decline when Wall Street opened on Thursday.

Apple’s shares slumped 7 per cent in after-hours trading on Wednesday after its warning prompted fears it may have run out of steam as Chinese rivals catch up with its technology and offer products at a fraction of the price.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said Apple’s days of technological supremacy may be numbered unless it can pull off another Steve Jobs-style breakthrough.

“A flagging Chinese economy and fewer upgrades are the headline reasons for Apple’s stumble, but read between the lines and the tech giant is just a whisker away from suggesting it may have pushed customers too hard on price,” Mr Hyett said.

“Fewer subsidies from mobile networks and US dollar strength may be the reasons prices have soared to quite the extent that they have – but with the global economy looking wobbly, we suspect a $1,000 iPhone is a luxury that’s starting to seem excessive to the marginal customer.”