Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Top 5 Things to Know in the Market on Tuesday, February 18th

Published 18/02/2020, 11:24
Updated 18/02/2020, 11:52
© Reuters.

© Reuters.

By Geoffrey Smith

Investing.com -- Apple (NASDAQ:AAPL) warns of a hit to sales from the Covid-19 virus, sending shockwaves through global markets. China says it will allow waivers of tariffs on some U.S. imports as it struggles to support its economy. Walmart (NYSE:WMT) reported Q4 sales below expectations, and markets are in risk-off mode as weak data out of Germany and the U.K. and dismal numbers from HSBC amplify Apple's warning. The outlier is Italy, where there's a bank merger frenzy going on. Elsewhere, Jeff Bezos announced a $10 billion Climate Change fund, partially answering questions as to why he's been selling so much Amazon (NASDAQ:AMZN) stock recently. Here's what you need to know in financial markets on Tuesday, February 18th.

1. Apple infected by Coronavirus

Apple (NASDAQ:AAPL) warned that it would miss its sales targets for the current quarter due to Covid-19 outbreak, the biggest western industrial company yet to make such a statement. It cited lower sales in China itself, which accounts for around 20% of iPhone sales, and production constraints in its supply chain.

Extended travel curbs and quarantining mean that China’s factories are running at around half of their capacity currently, according to various reports, even though the official Chinese data continue to show a slowdown in the incidence of new infections and deaths.

Apple (NASDAQ:AAPL) didn’t update its sales guidance of between $63 and $67 billion, reflecting a high degree of uncertainty that spooked global markets on Tuesday.

2. China to waive tariffs as Pelosi bashes Huawei

China said it would allow companies to apply for exemptions from tariffs on a broad range of imports from the U.S., including agricultural goods such as pork, soybeans and beef, as well as energy imports such as crude oil and liquefied natural gas.

The moves, which go beyond what China agreed to in its Phase-1 trade deal with the U.S., appear aimed at keeping a lid on food and energy prices at a time when millions of Chinese workers are having to accept reduced pay checks due to Covid-19-related disruptions.

The announcement came only hours after House Speaker Nancy Pelosi underlined the breadth of U.S. hostility to China’s growing clout in telecommunications, telling reporters that ““If we were to let Huawei have the information-highway dominance, it would be like putting the state police in the pocket of every person who uses that highway.”

3. Stocks set to open lower; Walmart's disappointing Q4

U.S. stock markets are set to reopen after the holiday weekend sharply lower, as Apple’s warning reverberates through global markets. Disappointing holiday-quarter sales from Walmart are adding to the gloom.

Chinese stock markets had ended lower, with the blue-cap A Shares index losing 1.1% and the tech-heavy CSI 300 losing 0.5%, and most European markets had followed them. By 6:30 AM ET (1130 GMT), the Stoxx 600 was down 0.4% at 430.10.

The Dow 30 futures contract was indicated down 156 points, or 0.5%, while the S&P 500 Futures contract was down 0.4% and the Nasdaq 100 contract was down 0.7%.

Other markets were also in risk-off mode: the yield on the U.S. 30-Year Treasury bond fell below 2% and gold futures rose 0.3% to $1,590.35 an ounce. U.S. crude oil futures fell 1.5%.

The tone wasn't helped by a weaker-than-expected ZEW sentiment index out of Germany and a drop in average earnings growth in the U.K.

4. Europe’s banking sector is on the move - just not in the same direction.

HSBC said it would cut 15% of its workforce and take over $7.2 billion in restructuring charges after profit fell 53% in 2019. HSBC stock fell 6.1% in London to a two-week low.

HSBC said it will slim down its investment bank – especially in the U.S. – to concentrate on more profitable activities. Another source of concern was that the bank still hasn’t found a permanent CEO to replace John Flint.

Elsewhere, Italy’s banks rode a wave of merger speculation after Intesa Sanpaolo (MI:ISP), the country’s largest domestic lender, made an all-stock offer worth 4.9 billion euros ($5.3 billion) for smaller rival UBI Banca (MI:UBI). Intesa stock rose 2.6%, while UBI stock rose 23%. Others lifted by the speculation included Banco Bpm (MI:BAMI) stock (+7.2%) and Mediobanca (MI:MDBI) (+2.0%).

Cynics suggested that Intesa moved in order to make it harder for the government to pressure it into taking over perennial basket-case Monte dei Paschi di Siena SpA (MI:BMPS) (+3.4%).

5. Bezos launches $10 billion fund to tackle Climate Change

Amazon.com (NASDAQ:AMZN) founder Jeff Bezos said he would set up a $10 billion philanthropic fund to counter the effects of Climate Change.

The ‘Bezos Earth Fund’, as it will be known, will back scientists, activists, non-government organizations and any other effort that “offers a real possibility to help preserve and protect the natural world,” and will be separate from Bezos’ commercial investments in experimental new energy technologies.

Bezos had sold over $4 billion in Amazon (NASDAQ:AMZN) stock in the last couple of weeks, according to SEC filings, something that went well beyond the funding for his Blue Origin rocket project, which he has previously said he funds to the tune of $1 billion a year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.