Stocks have started the session lower after Apple warned after the close of trading in New York that sales over the next few months are set to sharply undershoot forecasts.

Shares of the global bellwether for technology stocks were pumeled by nearly 8%, taking their drop over the past three months to over 30% and setting-off a wave of risk aversion that drove sharp moves in even the largest currency pairs, with the US dollar at one point crashing by roughly 3.7% versus the Japanese yen.

Commenting on the moves overnight in financial markets, Accendo Markets's Michael van Dulken told clients: "Apple's overnight sales warning specifically pointed to China contributing most of the expected shortfall for iPhones, Macs and iPads. This adds fuel to the fire of concerns about slowing global growth and/or a trade war, and compounds this week's China PMI Manufacturing misses.

"[...] Automated algo rotation into safe-haven of Japanese Yen, made worse by low post-holiday Asian volumes, led to a flash crash in most of the main currencies (USD, EUR, GBP). Although the Pound is now off its worst levels, weakness is helping the FTSE cushion yesterday's Tech blow."

Against that backdrop, as of 0824 GMT the benchmark Stoxx 600 was trading lower by 0.72% or 2.44 points to 334.77, alongside a drop of 0.69% or 74.13 points to 10,506.12 for the German Dax and a decline of 0.91% or 42.55 points to 4,647.03 for the Cac-40.

Unsurprisingly, the biggest drag in stockmarkets was coming from technology issues, with the Stoxx 600 sector gauge retreating by 2.43% to 382.42.

After the closing bell on Wall Street, Apple chief, Tim Cook, told investors he expected the company's first quarter sales to clock-in at approximately $84bn, which was significantly less than the range of between $89bn to $93bn that the company had guided towards previously.

Cook blamed weaker demand for iPhones and slower growth in China for the lowered guidance.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," the executive said.

Nevertheless, while not all analysts were quite as upbeat, there was some talk in markets to be heard regarding the prospect for economic stimulus in China, with those at Danske Bank saying: "We look for US-China deal in next 3-6 months to remove a key headwind. We also expect further stimulus coming soon (big tax cut to both consumers and companies and one or more reductions in the reserve requirement ratio)."

Meanwhile, in the background, a meeting between top Democratic and Republican congressmen and the US President, Donald Trump, in the White House, failed to yield any progress in talks aimed at ending the partial federal government shutdown.

On the economic front, investors were waiting for the release of the latest on euro area money supply data covering the month of November.

For later in the session, and ahead of Friday's monthly jobs report in the States, the focus was expected to be on other key US labour market indicators, including consultancy ADP's private sector payrolls figures covering the month of December and weekly unemployment claims data.

Also due out in the afternoon, the US Department of Energy was scheduled to publish its weekly inventory figures.

US stocks reversed earlier losses to finish in the green on Wednesday, ringing in the new year despite disappointing Chinese manufacturing data undermining sentiment before the opening bell.

The Dow Jones Industrial Average was up 0.08% at 23,346.24, the S&P 500 added 0.13% to 2,510.03, and the Nasdaq 100 improved 0.49% to 6,360.87.

Not long after the open, both the Dow and the S&P were down 0.7%.

“The year has already got off to a disappointing start, with risk aversion weighing heavily across asset classes as the trend that battered confidence in the final month of last year carries over into this,” said Oanda analyst Craig Erlam of the negative start to the session.

“Naturally, it was a rather quiet end to the year with nothing really changing on the fundamental landscape but unfortunately during that time of reflection, investors found no reason to be less pessimistic.”

China’s private Caixin/Markit manufacturing purchasing managers’ index released earlier showed a drop to 49.7 in December from 50.2 in November.

This was the first contraction in 19 months and missed expectations of 50.1.

The figures confirmed a trend seen in the official PMI released on Monday, which slipped to 49.4 in December - its weakest level since early 2016.

That weak Chinese data initially overshadowed news overnight that US President Trump was reaching out to Congress to help end the partial government shutdown.

Trump reportedly invited congressional leaders to a White House briefing on border security on Wednesday.

On the data front, the seasonally-adjusted IHS Markit final US manufacturing purchasing managers’ index printed at 53.8 in December, down from 55.3 the month before.

This marked a 15-month low amid a weaker rise in new business and the joint-softest expansion in output since September 2017.

“Manufacturers reported a weakened pace of expansion at the end of 2018, and grew less upbeat about prospects for 2019,” said Chris Williamson, chief business economist at IHS Markit.

“Output and order books grew at the slowest rates for over a year and optimism about the outlook slumped to its gloomiest for over two years.

“The month rounds of a fourth quarter in which manufacturing production is indicated to have risen at only a modest annualised rate of about 1%.”

In corporate news, electric car maker Tesla tumbled 6.81% as it revealed that it delivered 90,700 vehicles in the fourth quarter, falling short of analysts’ expectations, and announced a $2,000 price cut on its vehicles.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said that for most automotive groups, it would be a very impressive update.

“Almost tripling the number of vehicles you deliver in just one year is no mean feat, and Musk and his team deserve a huge amount of credit.

“But unfortunately for Tesla shareholders, the market has come to expect Herculean achievements, and sometimes that means the bar is just that little bit too high.

“Deliveries have fallen short of what some analysts had expected and the shares are suffering as a result.”

Britain’s manufacturers are facing the biggest shortage of skilled workers since 1989 amid record levels of UK employment and falling numbers of EU27 nationals coming to the country to work since the Brexit vote. The British Chambers of Commerce (BCC) said more than four-fifths of manufacturers struggled to hire the right staff in the final months of 2018. – Guardian

Apple cut its sales forecasts for its key end of year period on Wednesday, citing the unforeseen “magnitude” of the economic slowdown in China. Trading in the company’s shares was temporarily halted as Tim Cook, Apple’s chief executive, issued a letter to shareholders explaining the reason for the change. When selling started again, Apple shares fell by 7.45%, wiping $55bn (£44bn) off its value. - Guardian

A high-profile insider trading case against Deutsche Boerse's former boss Carsten Kengeter has closed after he agreed to pay €4.75m (£4.2m) and make a donation to charity. The decision to drop the probe ends a long-running investigation which began when Deutsche Boerse was in merger talks with the London Stock Exchange (LSE) over a potential £21bn deal. The ill-fated tie-up was eventually quashed for competition reasons. - Telegraph

A Californian fashion brand that counts celebrities Jennifer Lopez and Cara Delevigne as fans is gearing up for a £25m listing on London's junior stock market. LA-based photographer and DJ Corey Epstein and entrepreneur Mark Lynn set up DSTLD in 2014 to sell premium jeans directly to consumers at a lower price than traditional retailers. - Telegraph

The government could raise almost £7 billion a year by tightening up five wealth taxes, a think tank has claimed. Income growth in Britain has been stagnant for more than a decade, but levels of wealth have soared and the taxation system is not properly geared towards taxing it, the Resolution Foundation said. - The Times

An influential parliamentary committee is investigating why HM Revenue & Customs threatened Iceland Foods with a £21 million bill over a Christmas savings scheme for low-paid staff. Nicky Morgan, chairwoman of the Treasury select committee, said that the decision appeared “perverse” and risked dissuading the company from assisting its employees. The supermarket chain attacked what it called the taxman’s “idiotic” actions. - The Times