Global Stocks Sink After Tech Giants Report Earnings
May 01 2020 - 7:08AM
Dow Jones News
By Avantika Chilkoti and Stuart Condie
Global stocks slumped Friday after Apple and Amazon.com reported
earnings that highlighted the impact the coronavirus pandemic is
having on the world's biggest companies.
Futures linked to the S&P 500 fell 2% early Friday,
suggesting U.S. markets could open lower and extend Thursday's
losses. The U.K.'s FTSE 100 dropped just over 2%. Japan's Nikkei
225 closed down 2.8% and Australia's S&P/ASX 200 ended 5%
lower. Markets in China, Hong Kong and across most of Europe were
closed for the May Day holiday.
On Thursday, Amazon announced record revenue but disappointed on
profits as coronavirus-related costs such as employee testing and
higher wages added to expenses. Apple held off on providing
guidance for the current quarter for the first time since late
2003. Both stocks have led markets higher in recent weeks.
"It's a warning shot across the bow that no company is immune
from this even if you're able to raise your top-line revenues,"
said Brian O'Reilly, head of market strategy for Mediolanum
International Funds.
Ahead of the opening bell in New York, shares in Apple dropped
3% in off-hours trading and Amazon fell 5.5%.
U.S. stock benchmarks clocked their largest percentage gains
since 1987 last month. The S&P 500 was up 12.7% in April, while
the Dow Jones Industrial Average gained 11.1%. The tech-heavy
Nasdaq Composite jumped 15.5%, its biggest monthly gain since June
2000.
"If you have been involved in the market, there's a few reasons
to take a little bit off the table and a pullback would be
healthy," said Chris Weston, head of research for Pepperstone
brokerage in Australia.
Adding to investor jitters Friday were concerns about fresh
tensions between the U.S. and China. In an unusual public
statement, a U.S. intelligence agency said Thursday that it was
investigating whether the coronavirus may have escaped from a
laboratory in Wuhan, China.
"The important thing for investors is that these tensions around
trade, these tensions around technology and technology transfers,
and tensions around geopolitics more broadly, these issues are
going to persist and maybe even heighten as we go forward," said
Joseph Little, chief global strategist at HSBC Global Asset
Management.
Investors will watch closely as a string of companies publish
results Friday, including energy majors Exxon Mobil and
Chevron.
Mike Bell, global market strategist at J.P. Morgan Asset
Management, said the recent rally in U.S. stocks didn't reflected
the gloomy picture painted by economic data.
"There is such a risk from here that perhaps the reopening of
the economy, at least in a sustained way, takes longer than the
market and people had hoped for," said Mr. Bell.
Brent crude, the global oil benchmark, dropped 1.8% to $26.02 a
barrel, a muted move given wild swings in energy markets in recent
weeks. Analysts expect demand for fuel to rise as lockdown rules
are gradually lifted and supply eases as output cuts agreed by the
Organization of the Petroleum Exporting Countries come through.
The yield on the 10-year U.S. Treasury note fell to 0.608% from
0.619% Thursday. Yields fall as bond prices rise.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
May 01, 2020 06:53 ET (10:53 GMT)
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