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Markets

Asian stocks fall as Apple warning stokes fears of supplier crunch

Japanese exchange plunges over 700 points at open of 2019 session

The Tokyo Stock Exchange opened sharply lower on Friday, mirroring U.S. and Asian markets. (Photo by Wataru Ito)

TOKYO -- Stock markets in Asia closed mixed on Friday, as shares in Japan dived on the first trading session of the new year, while China bounced back on hopes for an end to the trade war with the U.S.

Japan's benchmark Nikkei Stock Average ended down 2.3% to 19,561.96, after falling more than 700 points in early-morning trade. In 2018, the index marked its first annual decline since 2011 after plunging more than 10% in December.

Friday's fall was fueled by concerns over the earnings of Apple suppliers after the iPhone maker warned its revenue for the October-December quarter was lower than previously forecast. Apple-related stocks fell across the board. iPhone suppliers Murata Manufacturing and Taiyo Yuden each fell more than 10%, while TDK declined nearly 8% and Japan Display more than 5%.

"Stock flows are very limited, with many investors choosing to sit and simply wait to see what happens, which is causing mass volatility," said Masato Futoi of Tokai Tokyo Securities. "Those who are selling are getting rid of Apple-related stocks."

Pressure on Apple suppliers also hit Taiwan's stock market, which fell further absorbing the Apple shock on Thursday. Taiwan's equity benchmark declined 1.2%, with key iPhone assembler Foxconn Technology, which trades as Hon Hai Precision Industry, down 2%.

The declines followed a slide in U.S. stocks in reaction to Apple's warning. The Dow Jones Industrial Average finished 660 points lower on Thursday.

Apple CEO Tim Cook told investors in a Wednesday letter that revenue in the October-December period likely came to $84 billion, 5% to 10% lower than previous projections. He cited the slowdown of business in China as a reason.

Chinese stocks, by contrast, rebounded on news that U.S. and Chinese officials will hold talks on Monday, raising hopes for a resolution of the trade dispute between the two countries. Both the Shanghai Composite Index and Hong Kong's Hang Seng Index rose more than 2%.

Chinese shares have already been on the decline amid concerns over an economic slowdown. China's Caixin PMI for December 2018 announced on Wednesday was 49.7, down 0.5 from the previous month and below the crucial 50.0 mark that separates growth from contraction -- the first time it has slid below the mark since May 2017.

South Korean stocks reversed early losses to end the session 0.8% higher, while markets in Southeast Asia also closed up.

The yen's volatility continued, weakening to 108.2 against the dollar after initially strengthening to 107.6.

The yield on 10-year Japanese government bonds, which moves in the opposite direction to its price, fell to minus 0.050%, its lowest level since November 2016.

Nikkei staff writer Jada Nagumo contributed to this report.

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