Asia Stocks, U.S. Futures Drop After Apple Warning: Markets Wrap

0 2 months ago


(Bloomberg) — Asian stocks fell with U.S. futures and bond yields after Apple Inc. said quarterly sales would miss forecasts, illustrating the blow to corporate earnings and economic growth from the deadly coronavirus.

Equity benchmarks in Tokyo, Seoul and Hong Kong saw declines of over 1%. Sydney and Shanghai saw more modest drops. Apple suppliers including TDK Corp. and Tokyo Electron Ltd. slumped after the iPhone maker warned on both production and sales disruptions due to the epidemic. Ten-year Treasury yields slumped as trading restarted following a U.S. holiday Monday. Australia’s dollar dropped after the central bank said it had discussed cutting interest rates two weeks ago.

Tuesday’s trading session saw renewed concerns about the coronavirus impact, even as the growth rate of cases in China’s Hubei province — the epicenter of the disease — continues to stabilize. It’s a turnaround from Monday, when sentiment was lifted by Chinese policy makers’ moves to support companies hit by the prolonged shutdown of large parts of the country. China’s stocks had recouped all of their losses following the Lunar New Year holiday.

“So far I believe that most of what we are seeing is delayed consumption,” Andy Kapyrin, a partner at RegentAtlantic Capital, told Bloomberg TV. If the scenario turns into destruction of demand, that “can start to have serious economic ramification,” Kapyrin said.

In a statement late Monday, Apple said that while work is starting to resume in China, “we are experiencing a slower return to normal conditions than we had anticipated.” Global iPhone supply will be “temporarily constrained,” the company said.

The Australian dollar weakened after the Reserve Bank of Australia said it reviewed the case for a further rate cut at its last meeting, but didn’t go ahead — to avoid extra borrowing as house prices rise. Elsewhere, Brent crude fell, and sterling was under pressure amid concerns about the challenges in looming U.K.-European Union trade talks.

Here are some key events coming up:

Earnings season rolls on, with results Tuesday from HSBC Holdings Plc and Walmart Inc.; Deere & Co. results are set for Friday.Germany’s ZEW survey of investor confidence is due Tuesday.Minutes of the most recent Federal Reserve meeting are published on Wednesday.Indonesia is expected to cut interest rates on Thursday, following emerging-market peers that have already moved.Group of 20 finance ministers and central bank chiefs are scheduled to meet Feb. 22-23 in Riyadh, Saudi Arabia, and are expected to discuss efforts to support growth amid the coronavirus threat.

These are the main moves in markets:

Stocks

Nasdaq 100 futures were down 0.6% compared with Friday’s close, as of 11:52 a.m. Tokyo time. Futures on the S&P 500 Index were down 0.3%.Topix index fell 1.2%.Australia’s S&P/ASX 200 Index fell 0.3%.Kospi index fell 1.4%.Shanghai Composite Index dropped 0.4%.Hang Seng Index fell 1.3%.

Currencies

The Japanese yen edged up 0.2% to 109.69 per dollar.The offshore yuan fell 0.2% to 6.9978 per dollar.The pound was at $1.2998 after retreating 0.3% Monday.The euro was little changed at $1.0828.The Aussie fell 0.4% to 66.86 U.S. cents.

Bonds

Ten-year Treasury yields fell about four basis points, to 1.55%.Australia’s 10-year bond yield edged down a basis point, to 1.04%.

Commodities

Brent crude fell 0.9% to $57.18 a barrel.Gold rose 0.4% to $1,587 an ounce.

–With assistance from Todd White and April Ma.

To contact the reporter on this story: Andreea Papuc in Sydney at apapuc1@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna Ossinger

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