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China’s frail growth could weigh on companies with exposure to the world’s second-largest economy, including Apple, big chipmakers and luxury retailers as they report quarterly results in the next few weeks.
“The post-zero COVID reopening has been disappointing by basically all measures in China, and the country’s hesitance to do broad-based consumer-facing stimulus is weighing on sentiment,” said Ross Mayfield, investment strategy analyst at Baird. “That’s going to have a spillover effect on the European and U.S. companies that are levered to the country.”
With China’s youth unemployment hitting a record 21% in June, young consumers may favor moderately-priced products and services and forgo big ticket purchases. Analysts estimate NXP reporting a 3.2% drop in quarterly revenue, with Texas Instruments’ revenue tumbling 16%, which would be its steepest drop since 2009, according to Refinitiv.
The specialty glass maker blamed “anticipated recession-level demand” for weak results in its previous quarterly report last April. China accounted for 30% of Corning’s net sales last year.
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