Stock Futures Drop After Apple’s Warning on Sales: Markets Wrap

02/17/2020

U.S. and Japanese futures slid after Apple Inc. said quarterly sales would miss forecasts, illustrating the blow to corporate earnings and economic growth from the deadly coronavirus.

Attention will turn to suppliers in Asia after Apple warned on both production and sales disruptions due to the epidemic. With U.S. markets shut for a holiday Monday, Asian markets have no cue from American trading overnight. Treasuries restart trading Tuesday. The pound fell after Prime Minister Boris Johnson’s envoy attacked the European Union’s stance ahead of trade talks.

Investor sentiment began the week on the front foot after China’s central bank said it will let banks run up more non-performing loans in a bid to ease the virus’ impact. Still, Singapore’s government cut its growth forecasts, citing uncertainty over the length and severity of the outbreak.

“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 Monday, Apple said while work is starting to resume around China, “we are experiencing a slower return to normal conditions than we had anticipated.” Global iPhone supply will be “temporarily constrained,” it said.

Elsewhere, West Texas crude oil traded around $52 a barrel and currency trading was subdued.

Here are some key events coming up:

Earnings season rolls on with results from companies including: BHP Group Ltd. on Monday; Tuesday brings Glencore Plc, 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 from Brazil to South Africa which have lowered borrowing costs already this year.

These are the main moves in markets:

Stocks

Nasdaq 100 futures dropped 0.5%. Futures on the S&P 500 Index fell 0.2%.
Futures on the Nikkei 225 fell 0.7% in Chicago.
Australia’s S%P/ASX 200 Index fell 0.4%.
Hong Kong’s Hang Seng Index futures ticked up 0.1% earlier.
The Stoxx Europe 600 Index advanced 0.3% Monday.

Currencies

The Japanese yen was little changed at 109.83 per dollar.
The offshore yuan traded at 6.9866 per dollar.
The pound held a loss to trade at $1.3003.
The euro was little changed at $1.0836.

Bonds

Germany’s 10-year yield was unchanged at -0.403% Tuesday.
U.S. 10-year note futures were flat.
Australia’s 10-year bond yield was steady at 1.05%.

Commodities

West Texas Intermediate crude fell 0.2% to $51.97 a barrel.
Gold rose 0.2% to $1,584.95 an ounce.

— With assistance by Todd White

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