Stocks across the region slipped while the morning trading session in Hong Kong was scrapped due to weather, according to the exchange operator. Japanese equities fell for a second day after its economy expanded at a slower pace than initially estimated.

The declines followed selling on Wall Street that weighed on tech stocks, partly driven by concerns about Apple Inc’s iPhone sales in China. 

The S&P 500 fell 0.3%, while the Nasdaq 100 dropped 0.7%. Apple shares slumped 2.9%. US equity futures edged lower early Friday. The hit to sentiment for tech stocks flowed onto the Golden Dragon index of Chinese companies, which fell 4% — one of its worst days this year.

The dollar edged lower, but was still set for its longest run of weekly advances in years amid speculation the Federal Reserve will keep interest rates elevated. 

The offshore yuan weakened, approaching the lowest level on record. The official daily reference rate for the currency was lower, in a sign policymakers will allow gradual depreciation of the currency. Meanwhile, the Japanese yen briefly strengthened after Finance Minister Shunichi Suzuki said Japan will watch FX moves with a high sense of urgency and won’t rule out any options to address excessive moves.

“Economic development remains very important but the thing is it’s not very important for this administration to have GDP growth above 5% or below 5%,” Becky Liu, head of China macro strategy for Standard Chartered Bank HK Limited said on Bloomberg Television. “It’s much more important for them to drive China toward a new growth model that is sustainable and self-sufficient.”

China plans to expand a ban on the use of iPhones in sensitive departments to government-backed agencies and state companies, a sign of growing challenges for Apple in its biggest foreign market and global production base.

Beijing intends to extend that restriction far more broadly to a plethora of state-owned enterprises and other government-controlled organizations, people familiar with the matter said.

“Apple’s growth story is heavily reliant on China, and if the Beijing crackdown intensifies, that could pose a big problem to the bunch of other mega cap tech companies that rely on China,” said Edward Moya, senior market analyst for the Americas at Oanda. 

Others foresee a muted impact on Apple. Government officials were probably already avoiding the company’s products, according to Evercore ISI’s Amit Daryanani. A broad crackdown on the company would also affect jobs in China, where most iPhones are assembled, he wrote.

Economy, Fedspeak

Traders also kept a close eye on the latest US economic data, with solid jobless claims figures reinforcing the case for the Fed to keep rates elevated. Applications for US unemployment benefits fell to the lowest level since February. 

After climbing in the immediate aftermath of the report, two-year US yields fell below 5% and continued to trade lower in Asia. Yields on Australian and New Zealand government debt also declined.  

Fed Bank of New York president John Williams said US monetary policy is “in a good place”, but officials will need to parse through data to decide on how to proceed on interest rates. He spoke during a moderated discussion with Bloomberg’s Michael McKee in New York.

Separately on Thursday, Chicago Fed president Austan Goolsbee told the Marketplace radio program: “We are very rapidly approaching the time when our argument is not going to be about how high should the rates go.”

“We’ve seen this movie before,” said Mike Loewengart at Morgan Stanley Global Investment Office. “Yes, the economy has slowed and inflation has cooled, but employment continues to be a thorn in the side of the Fed, which has made softening the jobs market the cornerstone of its inflation battle. The Fed may be poised to leave interest rates unchanged later this month, but they’re nowhere close to backing away from a higher-for-longer stance.”

Oil declined for a second day on Friday after a nine-session rally propelled futures into overbought territory. For the week, the US crude West Texas Intermediate benchmark has risen by almost 1%, rallying at one point on Wednesday above $88 a barrel to the highest level since November.