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, one of the most significant indications yet that the disease has had a material impact on multinational corporations.

Futures tied to the Dow Jones Industrial Average dropped 0.5%, while contracts linked to the tech-heavy Nasdaq Composite fell 0.7%. Markets in the U.S. will reopen Tuesday after the Presidents Day holiday. The pan-continental Stoxx Europe 600 declined 0.4%. In Asia, most major markets closed down, with the Hang Seng Index falling 1.5%.

Shares of Apple declined 3.4% in offhours trading. The technology giant said revenue this quarter won't reach its targeted range of between $63 billion and $67 billion, as the virus has limited iPhone production and curtailed demand in China, where it derives close to 20% of its revenue.

"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 5.9% after Europe's largest bank by assets said it would cut 35,000 jobs and shed $100 billion in assets as it scales back operations in both the U.S. and Europe. Glencore also slipped 3.2% after the commodities trading giant reported a loss for 2019.

Shares of Unione di Banche Italiane surged 22% after rival Intesa Sanpaolo made a surprise takeover offer that values the Italian bank at EUR4.9 billion ($5.3 billion). Other European banking shares also rose, with Banco BMP rallying 8% and Banco de Sabadell up 4.5%.

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.

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

Elsewhere in currency markets, the Australian dollar slumped 0.4% against the U.S. dollar after the country's central bank flagged concerns about the coronavirus. Currencies of key oil-producing nations also declined against the dollar, with the Norwegian krone down 0.6% and Russia's ruble 0.4% lower.

"You had the RBA [Reserve Bank of Australia] minutes out where it said that there is a material risk from the coronavirus outbreak, which is weighing on the Australian dollar," said Giles Coghlan, chief currency analyst at brokerage HYCM. "Oil has been selling off, which has affected the related commodity currencies such as the ruble and the krone."

In premarket trading, Kroger rose 6.6% after Warren Buffett's Berkshire Hathaway said it had bought a $500 million stake in the company.

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 puts out the results of its survey. Walmart will also report earnings before U.S. markets open.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

February 18, 2020 07:08 ET (12:08 GMT)

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