Shares take hit as virus outbreak slams profits, events
BANGKOK – Stock markets slipped Tuesday as the impact from the virus outbreak that began in China deepened, with Apple saying it would fail to meet its profit target this quarter and China moving to postpone or cancel major events, including the Beijing auto show.
Britain's FTSE 100 dropped 1% to 7,362, while the CAC 40 in Paris declined 0.5% to 6,055. Germany's DAX lost 0.8% to 13,675. The future contract for the S&P 500 lost 0.4% while the Dow future was down 0.6%. U.S. markets were closed Monday for President's Day.
As the outbreak persists, bringing new travel advisories and disrupting trade, travel and supply chains, it is casting a widening shadow over the regional economy.
South Korean President Moon Jae-in said Tuesday that the coronavirus crisis has put the country’s economy in an “emergency situation” and called for aggressive efforts to support companies dependent on trade with China and prompt up consumption.
Governments around the region have cut interest rates, extended tax breaks and taken other measures to cushion the blow to businesses from plunging tourism and disrupted supply chains.
“Best to buckle in as we could be in for a bumpy ride the next few weeks as I'm struggling to find any research report that doesn't suggest Covid-19 could significantly affect short term earnings: Reiterate Sell,” analyst Stephen Innes of AxiCorp said in a report.
China reported 1,886 new virus cases and 98 more deaths in its update Tuesday. A report saying the disease outbreak has caused a mild illness in most people raised optimism among global health authorities.
China's biannual auto show, one of the industry's biggest international events, has been postponed, and many sports and entertainment events have been delayed or canceled to avoid travel that may spread the virus. The death toll from the outbreak rose to 1,868, with confirmed cases totaling 72,436.
But China looks likely to postpone its annual congress, the biggest political meeting of the year. The standing committee for the National People’s Congress will meet Feb. 24 to deliberate postponing the meeting that is due to start March 5.
Japan's Nikkei 225 index lost 1.4% to 23,193.80, while the Hang Seng in Hong Kong lost 1.5% to 27,530.20. In South Korea, the Kospi shed 1.5% to 2,208.88. The Shanghai Composite index erased early losses to edge 0.1% higher to 2,984.97. Australia's S&P ASX/200 fell 0.2% to 7,113.70. India's Sensex skidded 0.9% to 40,699.65.
Apple Inc. joined the growing number of companies who are forecasting a hit to their bottom lines from the outbreak, which has prompted Chinese authorities to put into lockdown cities that are home to more than 60 million people.
Apple warned its investors on Monday that it won't meet its second-quarter financial guidance because the outbreak has cut production of iPhones. The company said all of its iPhone manufacturing facilities are outside Hubei province, the epicenter of the outbreak, and all have been reopened. But production is ramping up slowly.
Technology shares are taking a beating. Samsung Electronics' shares fell 2.8% on Tuesday, while Sony Corp. fell 2.5% and computer chip maker TMSC dropped 2.9%.
Meanwhile, bank HSBC said it expected a hit from the virus's disruption to business as it unveiled a deep overhaul of its operations, including 35,000 job cuts. Its shares were down over 6%.
In other trading, benchmark U.S. crude oil lost 92 cents to $51.13 per barrel in electronic trading on the New York Mercantile Exchange. It gained 63 cents overnight. Brent crude oil, the international standard, lost $1.13 to $56.54 per barrel. It gained 35 cents on Monday.
In currency markets, the dollar fell to 109.72 Japanese yen from 109.89 yen on Monday. The euro edged down to $1.0825 from $1.0836.
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