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Reports of China’s Ban on Apple Inc.’s iPhone Shakes Markets

Miguel A. Rodriguez
Miguel A. Rodriguez
08 September 2023

While reports that Chinese government workers have been banned from using iPhones brought shares of Apple and other tech companies down, expectations that the Federal Reserve (Fed) may raise rates again have resurfaced. 

Tech company shares react to reports of ban of iPhone in China  

A Chinese ban on the iPhone by Apple Inc. sent American stocks down amid worries about what this would mean for other American technology firms.  

After reports surfaced that China has prohibited its state officials from using iPhones, the shares of Apple Inc's suppliers, such as Qualcomm Inc. and Micron Technology Inc., fell. Share of other larger capitalization companies, such as, Tesla Inc. and Nvidia Corp. also experienced declines of more than 2.5%.

Treasury bond yields continue to rise

Investors also have concerns about the rise in Treasury bond yields that started at the beginning of the month. This increase is primarily driven by the strength of American economic data, which leads investors to believe the current high interest rates will continue for an indefinite period of time.

Yesterday, despite the initial effect of lower-than-expected unemployment claims data, which strengthened the case for the Fed to maintain high rates, treasuries and the Dollar showed little movement.

Investors are back to expecting a new rate hike from the Fed

Additionally, investors' expectations of a new rate hike have returned since the most recent economic data has demonstrated the resilience of the US economy in the face of unprecedented interest rate increases by the US central bank. The probability of a rate hike at the upcoming Fed meeting is currently 48.3%, according to the market.

US indices in focus

The 10-year bond's price of 4.28% remained unchanged yesterday while the S&P 500 declined for a third straight session and the Nasdaq 100 dropped more than 1%.  

According to technical analysis, tech stocks are starting to display signals of weakening. Apple Inc. is already down more than 11% from its mid-July highs and is starting to trade below the 100-day exponential moving average, which is regarded as a bearish indication by technical analysis. 

DMO graph 8.9.2023.png

Apple monthly chart September 8, 2023. Sources: Bloomberg, Reuters.

Key Takeaways

  • US stocks fell on news that Chinese workers have been banned from using iPhones.
  • Treasury bond yields have been rising since the start of the month.
  • The Dollar held its ground yesterday.
  • Investors expect a rise in rates after publication of recent economic data.
  • The Nasdaq 100 and S&P 500 indices fell yesterday.
  • Apple Inc. fell by more than 11% from highs reached in the middle of July.

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Miguel A. Rodriguez
Miguel A. Rodriguez
financial_writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.