Global equities weaken as Apple warning raises China virus fears

Dollar slides versus Japanese yen, crude oil slips

NEW YORK, Feb 18, (AP): US stocks slipped in early trading Tuesday after technology giant Apple became the most well-known company to warn of a financial hit from the virus outbreak in China.

The maker of iPhones said it will fall short of its revenue forecasts in the fiscal second quarter because of production problems in China. Demand for iPhones is also down in China because stores are either closed or operating on reduced hours.

Technology stocks led the selling. Apple shed 2.4%. Chipmakers, which also rely heavily on China for sales and supplies, broadly slid. Intel shed 1.2%.

Banks and energy stocks also fell in the early going. Wells Fargo slid 1.1% and Schlumberger slipped 1.4%.

Bond prices rose. The yield on the 10-year Treasury fell to 1.56% from 1.58% late Friday. Crude oil prices fell 1.3%.

Utilities and companies that rely on consumer spending held up better than most of the market.

The S&P 500 index fell 0.3% as of 10:50 am Eastern time. The Dow Jones Industrial Average fell 163 points, or 0.6%, to 29,234. The Nasdaq fell 0.1%. The Russell 2000 index of smaller company stocks fell 0.3%. European and Asian markets fell.

The viral outbreak that began in China has now infected more than 73,000 people and continues to hurt businesses worldwide. The majority of the cases and deaths remain centered in China.

Businesses continue to feel the economic impact from the virus. The Beijing auto show, the industry’s biggest global event of the year, is being postponed indefinitely from its April date. Apple is the latest company to warn investors that the virus will hurt their financial performance.

Technology and health care companies have been the most vocal about mentioning the new coronavirus in their earnings conference calls, according to FactSet.

Financial services company Franklin Resources rose 8.5% after saying it is buying competitor Legg Mason for $4.5 billion. The deal will create a financial company with a combined $1.5 trillion in assets under management. Legg Mason shares rose 23.6%.

Investors face a shortened week because of Monday’s President’s Day holiday, but there are still several key earnings and economic reports on tap.

More than three-quarters of the S&P 500 has already reported financial results, and 51 companies are

Specialist Thomas Schreck, (left), and trader Fred DeMarco work on the floor of the New York Stock Exchange, Feb 18. US stocks slipped in early trading Tuesday after technology giant Apple became the most well-known

company to warn of a financial hit from the virus outbreak in China. (AP)

scheduled to release results this week. Devon Energy and Concho Resources will report their results later Tuesday. Progressive will report results on Wednesday and ViacomCBS will report on Thursday.

The government will release its producer price index for January on Wednesday, along with housing starts data.

Shares slipped in Europe and Asia on Tuesday as the impact from the virus outbreak that began in China deepened, with Apple saying it would fail to meet its profit target in this quarter and China moving to postpone or cancel major events, including the Beijing auto show.

Britain’s FTSE 100 dropped 0.4% to 7,404.04, while the CAC 40 in Paris declined 0.7% to 6,041.20. Germany’s DAX lost 0.8% to 13,674.95. The future contract for the S&P 500 lost 0.3% while the Dow future was down 0.4%. US 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 Jaein 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.

In a Cabinet meeting, Moon said there’s an “absolute need for the government to employ extraordinary measures by utilizing every method it could take” to ease the economic impact of the outbreak.

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,” 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 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 secondquarter financial guidance because the outbreak has cut production of iPhones. The Cupertino, Californiabased 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.

“The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues,” Apple said in a statement.

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%.

In other trading, benchmark US crude oil lost 68 cents to $51.37 per barrel in electronic trading on the New York Mercantile Exchange. It gained 63 cents overnight to $52.05 per barrel. Brent crude oil, the international standard, lost 89 cents to $56.79 per barrel. It gained 35 cents on Monday to $57.67.

In currency markets, the dollar fell to 109.73 Japanese yen from 109.89 yen on Monday. The euro edged down to $1.0828 from $1.0836.

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