In the wake of Apple Inc.’s revenue warning, investors are finding that exposure to China is not all it’s cracked up to be.
The unexpected revision late Wednesday is weighing heavily on China-exposed companies across sectors that have already been struggling to cope with trade war uncertainties. To top that off, Kevin Hassett, chairman of the White House Council of Economic Advisers, cautioned Thursday that more U.S. companies can be expected to lower earnings forecasts as the softer Chinese economy cuts into their sales.
A potential slowdown in China has been an overhang on investor sentiment for a while now, and intensified this week after key manufacturing data showed factory conditions there slumped in December. Apple conceded that it failed to foresee the “magnitude of the economic deceleration, particularly in Greater China.”
Other bellwether companies that have also warned about a deteriorating economic environment in the country include U.S. delivery firm FedEx Corp., coffee giant Starbucks Corp. and jewelry retailer Tiffany & Co., as well as German automaker Daimler AG.
Caterpillar Inc. and Boeing Co., two companies that have borne the brunt of trade-related uncertainties and negotiations, dropped further on Thursday. Other notable names in the sector with sizable China exposure include Deere & Co., Emerson Electric Co., 3M Co. and Honeywell International Inc.