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Stocks slide on Apple's virus warning, euro near three-year low

Published 18/02/2020, 17:13
Updated 18/02/2020, 17:13
© Reuters. FILE PHOTO: Traders work on the floor at the NYSE in New York

© Reuters. FILE PHOTO: Traders work on the floor at the NYSE in New York

By Herbert Lash

NEW YORK (Reuters) - Oil prices tumbled and global equity markets slid on Tuesday after Apple Inc (NASDAQ:AAPL) said it was unlikely to meet its sales guidance because of the coronavirus outbreak in China, a warning highlighting the epidemic's threat to global growth and corporate profits.

China reported its fewest new coronavirus infections since January and its lowest daily death toll in a week, but the World Health Organization said data suggesting the epidemic had slowed should be viewed with caution.

Apple said on Monday that manufacturing facilities in China that produce its iPhone and other electronics had begun to reopen, but were ramping up more slowly than expected.

The disruption in China will result in fewer iPhones available for sale around the world, making Apple one of the largest Western firms to be hurt by the outbreak.

Gold climbed more than 1% to a two-week high as investors sought safety in the wake of Apple's warning and the price of Brent, the global crude benchmark, fell below $57 a barrel.

Forecasters, including the International Energy Agency (IEA), have cut 2020 oil demand estimates because of the virus.

Equity markets around the world fell, with MSCI's all-country world index (MIWD00000PUS) slipping 0.72%.

The pan-European STOXX 600 index (STOXX) lost 0.38% and emerging market stocks lost 1.28%.

HSBC Holdings PLC's (L:HSBA) announcement that it would shed $100 billion in assets, shrink its investment bank and revamp its U.S. and European businesses in a drastic overhaul added to concerns about the impact of the coronavirus.

The UK-based bank, whose huge Asian operations are headquartered in Hong Kong, said the coronavirus epidemic had significantly impacted staff and customers. HSBC shares fell 6.35%, leading the FTSE 100 index (FTSE) to close down 0.69%.

On Wall Street, the Dow Jones Industrial Average (DJI) fell 252.29 points, or 0.86%, to 29,145.79, the S&P 500 (SPX) lost 21.49 points, or 0.64%, to 3,358.67 and the Nasdaq Composite (IXIC) dropped 45.93 points, or 0.47%, to 9,685.25.

"We're seeing some renewed weakness in the stock markets following the announcement by Apple," said Saxo Bank analyst Ole Hansen. "It's having a global impact on supply chains and shipments - this will have a negative impact on growth expectations."

Overnight in Asia, China's CSI300 blue chip stocks index (CSI300) lost 0.5% after gaining sharply on Monday, encouraged by a central bank rate cut and government stimulus hopes.[.T][.SS]

Japan's Nikkei (N225) lost 1.40%.

The dollar rose to nearly a three-week high against the euro after Germany's ZEW survey of economic sentiment showed slumping investor confidence in Europe's largest economy.

The euro (EUR=) was down 0.2% to $1.0812, while the dollar index (DXY) rose 0.3%. The Japanese yen strengthened 0.03% versus the greenback at 109.85 per dollar.

The ZEW research institute said in its monthly survey that investors' mood deteriorated far more than expected in February on worries the coronavirus would crimp world trade.

The survey added to expectations the German economy will lose more momentum in the first half as slumping exports keep manufacturers mired in a recession.

Safe-haven German 10-year bond (DE10YT=RR) yields fell to -0.43% at one point. Other 10-year bond yields in Europe (NL10YT=RR) (FR10YT=RR) fell similarly.

U.S. Treasury yields also fell. The benchmark 10-year note (US10YT=RR) rose 12/32 in price, pushing its yield down to 1.5474%.

The slide in oil prices was pressured by concerns over the impact on crude demand from the coronavirus outbreak in China and a lack of further action by the Organization of the Petroleum Exporting Countries and allies to support the market.

Brent crude (LCOc1) fell 74 cents to $56.93 a barrel after rallying in the previous five sessions. U.S. West Texas Intermediate crude (CLc1) fell 53 cents to $51.52 a barrel.

Spot gold added 1.4% to $1,602.25 an ounce.

GRAPHIC: Euro trashed! https://fingfx.thomsonreuters.com/gfx/mkt/13/2137/2105/Pasted%20Image.jpg

© Reuters. FILE PHOTO: Traders work on the floor at the NYSE in New York

Latest comments

Instead of worrying about Apple, I would rather keep an eye on Gold for signs of increasing global economic stress.
I wouldn't worry about Apple in the slightest. One bad quarter and mass agitation ensues. Apple dwarf incomes of some of the world's poorer nations. Apple will be fine...
no one's worried about apple. read again the article...
Exactly my point!
China already waited 40 years to 2nd largest GDP.. They dont mind wait another 20 year to overtake American. Just wait China going to revenge what the American done[/bully] to the rest of the world.
lol china wants to get big to revenge the world. funny...
Can you see that Apple(&most American company are very greedy) giving false information.
false information and propaganda is a worldwide evergreen issue. since and even before the roman empire. nothing new.
they surely have other plants to support the order
the california based company said Monday that all of its iphone manufacturing facilities are outside hubei province,the epicentre of out break ,and all have been reopened
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