Apple Stock News: Apple Gearing Up for Trade War
On last week’s Apple Stock News, antitrust probes by the government threatened Apple’s stocks. Other tech giants such as Alphabet, Amazon and Facebook were not spared.
Such threats resulted in Apple stocks plunging in May but it has since mostly recovered. However, should news of antitrust probes start spreading again, Apple stock is likely to fall. Apple bears will be on the lookout for any bad news.
This week, the focus is on Apple’s decision to shift production out of China, interest rate cuts and low iPhone sales.
Apple Preparing for Battle
Trade war tariffs placed on $300 billion worth of Chinese goods would drive prices of Apple’s best selling products up. This would render them less attractive to customers, potentially causing them to turn to Apple’s competitors.
For this reason, Apple has asked Foxconn to shift 15 to 30% of its production out of China to Southeast Asia.
Hon Hai Precision Industry, also known as Foxconn Technology Group, is Apple’s largest supplier.
This Taiwanese contractor currently makes most of its smartphones in mainland China. Escalating trade wars have forced Apple to reevaluate having so much production in China.
“Twenty-five percent of our production capacity is outside of China and we can help Apple respond to its needs in the U.S. market.”
Foxconn’s board nominee and semiconductor division chief, Young Liu
Interest Rate Price Potential Drop
Federal Reserve Chair, Jerome Powell, said that the central bank is willing to take monetary policy measures to ensure the US economy’s continued expansion. It raised investor’s hope of either a cut in interest rates or a rate cut.
However, their hopes were crushed. On 19 June 2019, a divided Federal Reserve indicated formally that no cuts are coming in 2019. This decision could drive tech companies stocks like Apple lower.
Despite the news, there is a possibility that policy loosening could happen before the end of the year.
“Many participants now see the case for somewhat more accommodative policy has strengthened.”
Jerome Powell, Federal Reserve Chair
Should the Feds carry though with their decision, it will drive tech stocks up significantly.
iPhone Demand in Decline Spelling Trouble for Apple Stock
Revenue from iPhone sales plunged 17% to just over $31 billion in the last quarter. As a result, waning iPhone demands are keeping investors on their toes.
Furthermore, competition from China’s smartphone brands like Huawei, pressure on lowering selling prices and slower upgrade cycles all contribute to the slowing demand.
Huawei, Apple’s neck to neck competitor, saw sales climb 39% during that same quarter. The Chinese tech giant continues to gain considerable market share in China, whilst Apple loses its footing. US ban on Huawei have fueled the Chinese nationalistic pride. Growing support for their home-grown brand, Huawei, have sent Chinese citizens dumping Apple for Huawei.
