Lucknow(Coinchapter.com): Apple’s stock price trades at the peak of a descending trendline, suggesting that the tech giant’s stock market performance would be somewhat timid in the coming days. Furthermore, protests at its iPhone manufacturing unit in China could taper investor sentiment until the matter is fully resolved.
Protests erupt at largest iPhone manufacturing plant in Zhengzhou
On November 24, workers at Apple’s largest iPhone manufacturing hub in China, operated by Foxconn, clashed with the police over a variety of issues.
The protests erupted over promised bonuses, fears of spreading COVID-19 infection, and pressure to maintain production ahead of the incoming holiday season. Livestreams of the clash showed that several workers were injured as the police intervened with batons and hazmat suits.
Foxconn, which owns the unsettled iPhone manufacturing unit in the city of Zhengzhou, issued an official statement on November 24 and apologized for a pay-related technical error that caused the initial unrest in the factory. The tech company added that it was in constant communication with the affected employees about the pay and bonuses and was doing its best “to actively solve the concerns and reasonable demands of employees”. Earlier, the firm had promised to pay workers 10,000 yuan ($1,400) to quit and leave the factory in an attempt to curb the protests.
Meanwhile, Apple was yet to release an official statement regarding the protests.
Why is it a big deal?
The COVID-19 pandemic and its resulting restrictions have been troublesome for U.S. tech giants since many have a significant base of operations in China. For instance, more than 95% of Apple iPhones are produced in the country while the Greater China region also contributes significantly to Apple’s net revenue.
However, an unexpected surge in COVID-19 cases has prompted the Government to take drastic measures, such as shutting down an entire city, to contain the outbreak.
During the first week of November, Apple said that its Zhengzhou facility in China was working under a ‘significantly reduced capacity due to COVID-19 restrictions. As a result, Apple lowered shipments of iPhone 14 Pro and iPhone 14 Pro Max and said that customers would experience longer wait times to receive their new products.
The delay, combined with uncertainties over pandemic restrictions, has negatively affected Apple’s performance on the stock market. Its gains over the last month stand at 2%, underperforming S&P’s monthly gain of 7%.
Price Analysis NASDAQ:AAPL
A quick technical analysis suggested some near-term pain for AAPL until fears over its China manufacturing unit are put to rest. The candles traded touched a downwards sloping trendline at xx. In each of the previous four occasions, AAPL’s price has moved south following a contact with this trendline.
However, the combination of the daily 50 and 20 SMA’s around $147 could offer support to an expected decline. A move below this confluence would put $145 and $138 in the limelight.
To overcome a bearish thesis, AAPL would have to regain the territory above $154.8, where its daily 200-SMA resides. Doing so would likely induce more bullish bets
