President Donald Trump’s ongoing trade war with China rattled Wall Street on Monday, sending the markets tumbling. The DOW lost more than 800 points, and Apple was caught up in the mayhem, too. Shares of Apple ended the day at US$193.34 per share, a loss of $10.68 (-5.23%), on heavy volume of 50.7 million shares trading hands.
Apple wasn’t random victim, however, as the company is considered to have significant exposure to trouble with China. Apple manufactures most of its hardware in China, and that hardware is potentially subject to tariffs President Trump is imposing on goods imported from China. Wall Street is concerned both about the effect that could have on Apple’s sales and profits in the U.S., and how any slowdown of China’s economy might affect sales in that country.
Then there’s the ongoing pro-democracy unrest in Hong Kong and what is being seen as a deliberate devaluation of the Chinese Yuan. China’s government usually steps in when the Yuan drops, but did not when the Yuan dropped on Monday. Analysts are seeing this as a sign that China’s Communist rulers have accepted they won’t be able to work out a deal with the U.S. any time soon, and are using the Yuan drop to help bolster domestic manufacturing. Wall Street is not keen on a protracted trade war.
It’s a big bunch of political mess, and an example of how Apple has grown to be so large that factors that have little to do with Apple’s execution of its strategy can still have an effect Apple’s stock valuation.