Chinese Stocks Spooked By Apple iPhone X Forecast Cut, Nikkei Boosted By BOJ Hopes

With most global markets closed for Christmas, the only overnight action was in Asia, which saw Chinese equities fall with tech stocks and names linked to Apple the worst performers after a report that Apple cut forecast iPhone X sales forecasts, while property firms surged on speculation of coming consolidation. As a result, after opening higher, the Shanghai Composite Index closed 0.5% lower on the day, the blue-chip CSI 300 Index fell 0.3%, the Shenzhen Composite Index retreated 0.9%, while the ChiNext small-cap and tech Index dropped 1.3%. The PBOC"s refusal to conduct a reverse repo for the second day did not boost the market mood.

The biggest Asian losers were Apple suppliers after the Taipei-based Economic Daily News reported that Apple has cut its sales forecast for the iPhone X by 40% from 50 million in Q1 to only 30 million. The report also noted that Foxconn’s Zhengzhou plant stopped recruiting workers. Following the news, Apple supplier Lens Technology Co. dropped 8.4% to be among worst performers on the ChiNext measure; Shenzhen Sunway Communication Co. -2.2%, Luxshare Precision Industry and GoerTek both dropped at least 4%. As the table below shows, it was a sea of red for Apple suppliers.

#Apple suppliers are trading lower after #Taiwan media reported that Apple cut forecast of #iPhone X sales in Q1 2018 to 30mln units from prev 50mln units. pic.twitter.com/6TrhcHuHAP

— YUAN TALKS (@YuanTalks) December 25, 2017

Offsetting the drop in tech names was strength among property firms: Gemdale rose 6.3% as the best performer on CSI 300 measure after Citic Securities analysts said that the planned strict implementation of property curbs in 2018 would boost industry consolidation and benefit big companies. Unless, of course, it ends up crippling the business for everyone in which case today"s spike will promptly turn into a selloff.

Elsewhere in open Asian markets, Japan"s Nikkei erased early losses and scraped out gains on Monday as expectations that the Bank of Japan would buy more exchange-traded funds (ETFs) offset drops by financial stocks, Reuters reported. Movements in Japanese equities were confined to a narrow range with foreign investor presence lacking due to Monday"s closure of other major markets for Christmas; as a result, the Nikkei finished 0.16% higher at 22,939.18.

Of Tokyo"s 33 subsectors, 10 were in the red, led by securities T and banking after their U.S. financial peers lost steam on Friday following their recent strong performance. Denim clothing store operator Jeans Mate 7448.T soared 20.2 percent after reporting that December existing store sales increased 13.2 percent from a year earlier.  Furniture and interior goods seller Nitori Holdings 9843.T sank 6.4 percent after the company saw its operating profit for the nine months through to Nov. 20 rise a modest 0.3 percent to 70.4 billion yen ($621.58 million).

Cryptocurrency related shares slipped following recent wild swings in bitcoin. Internet provider GMO Internet which is engaged in the "mining" of bitcoin, fell 4.8%.  Remixpoint, an operator of virtual currency trading post services, dropped 4%.

In FX, it was a quiet session, with the only major mover once again out of China, where the yuan surged over 240bp to hit 6.5514 per USD at one point, the strongest since mid-September. Earlier in the day, the PBOC raised the yuan’s fixing by 138bp to 6.5683 per USD, the highest since Sept. 20. The dollar was little changed against other major currencies on Monday in holiday-thinned trading while the cost of swapping the yen for the dollar jumped as banks scrambled to raise dollars for the year-end period.

With most currency trading centers except for Tokyo shut on Monday for Christmas, trading volume was less than 20 percent of the average for major currency pairs including the euro/dollar and the dollar/yen. 

According to Reuters, the discount for buying the yen at future dates widened sharply as non-U.S. banks, which typically buy dollars now with sell-back contract at a future date, scrambled to procure greenbacks for the year-end.  The one-week forward discount starting from Wednesday jumped to 0.23 yen from around 0.04 yen in the middle of last week.

“Because foreign banks are away and few market players are eager to offer dollars, the forward market is very thin,” said a currency trader at a major Japanese bank. “The market is very volatile and there are hardly any trades beyond one week."

Watch Live: Apple Unveils Latest iPhone From Spaceship Campus

Update: This seemed to sum things up in Cupertino perfectly - Steve Wozniak is wandering around. He said he is excited to see the new iPhone features, especially the facial recognition. He likes the feature a lot on his Samsung phone.

1001ET BLACKBERRY ENTERPRISE UPDATED TO AAPL IOS 11 MOBILE OPER SYSTEM

The stock ran up excitedly into the event...

1007ET APPLE TURNS POSITIVE AS PRODUCT EVENT BEGINS

1019ET Apple Watch - *FOSSIL SHARES DIP AS APPLE CLAIMS TOP POSITION IN WATCHES

*  *  *

As we detailed earlier, anticipation is sky high as CEO Tim Cook prepares to unveil Apple"s latest iPhones (and "one more things") from The Steve Jobs Theater at the new Apple "spaceship" Campus.

As CNET reports, for the past eight months, we"ve watched a parade of flagship phone launches, from power players like Samsung with the Galaxy S8 to scrappy players like Motorola with its family of Moto phones. Premium phones with not-so-premium prices like the OnePlus 5 have also competed for our attention.

Meanwhile, rumors about the next iPhone kept trickling out thanks to leakers and established publications alike.

Apple is set to cut through all the noise with the official unveiling of at least one new iPhone (and maybe more), as well as the rumored release of updates to the Apple Watch and Apple TV. There"s also a chance we get more details on the forthcoming HomePod smart speaker.

Watch live here (if you"re on a Mac with Safari).

Live Feed (via CNET):

What are we expecting...

 A weekend leak of some unreleased iOS 11 code may have spoiled all the surprises Apple had in store for tech fiends at tomorrow’s big iPhone event, with John Gruber of Daring Fireball calling the leaker “the least-popular person in Cupertino.”

There is expected to be three new phones. Two will at least be modest upgrades to the iPhone 7, getting beefier chips and the like.

The phone people really care about -- in imagination, if not necessarily spending plans (yet) -- is the 10th anniversary version of the phone.

While Apple was typically quiet about its plans, by now the world has a pretty good sense of the feature set.

The phone is expected to be Apple’s first with an organic light-emitting diode, OLED, display, which will be larger at 5.8 inches, and sharper, than the previous LCD displays.

Hold on to your hats: Apple ditched the home button in the phone, which is expected to now be unlocked through facial-recognition technology.

The phone is also expected to offer wireless charging and 3D sensors that enhance the performance of coming augmented-reality apps.

What will the stock do?

UBS technology analyst Steven Milunovich says there’s a distinct pattern in how Apple’s stock price reacts to these product launches.

“Based on the last five iPhone announcements, the stock has a reasonably consistent pattern: down in the two weeks preceding the event; up/down 1-2% the day of the event; up between the event and launch (phone availability about two weeks later); weak in the two weeks post launch; and then up going into earnings,” he wrote in a note out Tuesday morning.

“We think there is somewhat greater near-term downside risk this time though we expect the stock to outperform over the next 6-12 months.”

Here"s how the stock has moved before, during, and after previous iPhone announcements, relative to the S&P 500:

Apple Stock Soars Above Record Closing High

Despite declining earnings expectations, AAPL"s share price just broke above its record closing high (from Feb 2015).

As WSJ notes, the tech giant’s shares–among the most widely held and actively traded in the world–hit $133.42 moments ago, trading above their record close of $133 from February 2015. And they’re inches away from their all-time intraday high of $134.54, set in April 2015.

Shares of the $700 billion company are up about 41% in the past 12 months, and more than 9% since Apple pulled back the curtain on its latest earnings report on Jan. 31 to reveal an end to a three-quarter streak of declining revenue.

As the stock prices has soared, volume has slid...

Monday’s trading is the capstone of a recovery in the shares after a prolonged downturn from July 2015 to May 2016, when the stock fell 30% as investor concern mounted over the pace of iPhone sales, soft demand from China, and speculation about whether the company will ever again come up with a product with even a fraction of the impact of the iPhone. In that span, the Apple Watch failed to catch on as quickly as some had hoped, and sales of the company’s iPad tablet swooned.

Near the end of that stretch, Apple momentarily lost its crown as the world’s largest company by market capitalization to Google’s parent company, Alphabet.

Apple regained the mantle, and the gap between the two began to widen again when Warren Buffett"s Berkshire Hathaway revealed that it had taken a stake worth nearly $1 billion in Apple.

But earnings expectations have done anything but rise...

But don"t let that worry you...