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Ouch! Tech stocks plummeted yesterday, but don’t worry, Tech giants are already on the mend thanks to Tim Cook!

apple-exec-tim-cookThe slumping Chinese economy was apparently to blame for more than $75bn being wiped off the value of Apple yesterday, as China’s Shanghai Composite index fell by 8.7%, the biggest single day drop since the 2007 global financial crisis, and in the US, the Dow Jones Industrial Average lost more than 1,000 points within the first few minutes of trading, even after the New York Stock Exchange invoked Rule 48 before trading began, an emergency measure designed to curb volatility in the markets.

China has been a worry ever since the People’s Bank of China devalued the Yuan by 2% versus the dollar earlier this month, the largest rate cut of the past two decades. Apple’s share price dropped below $100 to as low as $92, before an email from Apple CEO Tim Cook to Jim Cramer at Realmoney.com that read something like this calmed fears and returned the stock to above the $100 mark:

“I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August. Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance on the year for the App Store in China during the last 2 weeks. Our performance so far this quarter is reassuring”

It wasn’t just Apple who suffered (albeit briefly), as the whole tech industry in the US began to slide; Facebook dropped 12% to $75.62, Amazon was down 6.4% to $463.03, Microsoft dropped 5.9% to $40.59, Twitter 8.9% to $23.56, Netflix 14.7% to $88.67, PayPal 9% to $31.17

Fast forward to the end of the day’s trading and, whilst everything in the garden was still not rosy, with Microsoft still down 1.7% at $42.34, Amazon 3.78% and Twitter 3.9% at 24.85, Cook’s email seemed to have done the trick as Apple surged back and went ahead of Friday’s closing price of $105.96 by 0.19%. Facebook also made a comeback of sorts to 82.09 but was still down 3.97% for the day.

European markets experienced a day of pure panic as the stock market had its worst day since 2008, but the early signs are that today’s rebound has been just as broad based as yesterday’s drop, and things are more or less back to normal. Amongst Tech stocks, Rocket internet opened up at 24.7 from a previous day close of 23.79, Just Eat has risen 5.7% to 375.1 from a 370 close price and Zoopla has gained 5.92% to hit 246.8.

In Japan, Sony led the tech recovery jumping the most it has done in the past six months of trading as investors brought stock back following the early rout. The stock gained as much as 6.2% whilst Nintendo gained 7.5% and components manufacturer Murata Manufacturing Co. gained 8.8% as the benchmark Topix index gained 1.9% overall.

So are we out of the woods? It would probably be fair to say, for the average European tech start-up at least, that we were never really in them, but if we consider that checking the pulse of Apple and China’s stock market price is the same as checking the pulse of the global tech industry, which is probably not far from the truth, then China’s slump, which continued today as stocks dropped a further 7%, hitting their lowest level in 8 months, is a worry.

For those who like to watch the markets, look out for the next rate hike in the US, its timing could be crucial, China’s decision over whether to instigate a campaign of quantitative easing, and whether speculators will stop punishing Chinese stocks by selling them off in vast quantities. For the rest of us, there’s nothing to see here, move along, go and play with your iPhone. Cook’s got it covered. Let’s hope he pings another email to Jim Cramer today. The power! Where’s Zuckerberg when you need him?

 

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