HSBC HSBC Holdings PLC

By Anna Hirtenstein 

Global stocks slipped after Apple warned that its revenue may be lower than forecast due to the coronavirus outbreak in China in one of the most significant indications yet of the impact on multinational businesses.

Futures tied to the Dow Jones Industrial Average dropped 0.6%, while contracts linked to the tech-heavy Nasdaq Composite retreated 0.9%. Markets in the U.S. will reopen after Presidents Day holiday. The pan-continental Stoxx Europe 600 lost 0.6%. In Asia, most major markets closed down, with the Hang Seng Index declining 1.5%.

Shares of Apple declined 3.7% in offhours trading. The technology giant said revenue this quarter won't reach its target range of between $63 billion and $67 billion as the virus limited iPhone production for world-wide sales and curtailed demand for its products in China. The company didn't provide an updated sales estimate, saying that the situation was still evolving. Apple derives close to 20% of its revenue from China.

"This is a reality check that it's really happening," said Kit Juckes, a macro strategist at Société Générale. "While it's not a big surprise that the global economy has been affected all the way to California tech, some people take this as a confirmation."

The full economic impact of the coronavirus is still unclear. The outbreak forced companies to shut down their Chinese operations temporarily, while travel bans and restrictions on movement in public spaces led to a slowdown in consumer spending and industrial production in the world's second-largest economy. The number of new cases of people diagnosed with the virus rose sharply last week, indicating that it isn't yet contained.

Among European equities, HSBC Holdings fell 5.7% after Europe's largest bank by assets said it would cut 35,000 jobs and $100 billion in assets as it scales back operations in both the U.S. and Europe. The bank also reported a 53% decline in profit for last year.

Oil prices slumped on renewed uncertainty about energy demand from China. Brent crude, the global benchmark, fell 1.8% to trade at $56.60 per barrel.

Investors directed capital into haven assets amid the fresh concerns about the global economy. The yield on U.S. 10-year Treasurys slipped to 1.539%, from 1.588% on Friday. Gold rallied 0.4% and the Japanese yen gained 0.2% against the U.S. dollar.

Later in the day, investors will get fresh insights into how optimistic home builders are in the U.S. when the National Association of Home Builders will put out the results of its survey.

(END) Dow Jones Newswires

February 18, 2020 05:29 ET (10:29 GMT)

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