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A mixed close on Wall Street points to a subdued start to Australian action as worries about the economic fallout from the coronavirus swirl around financial markets.
ASX SPI200 index futures edged up four points or less than 0.1 per cent to 7050 as a profit warning from global bellwether Apple weighed on Wall Street. The tech giant appears to confirm fears about the Covid-19 virus’s impact on the global economy when it downgraded its second-quarter earnings outlook, citing production disruptions and weak demand in China.
Apple’s downgrade followed a string of warnings on the local market yesterday relating to the virus outbreak. Cochlear, Altium and Ansell all highlighted uncertainties tied to production delays and soft consumption in China as they released half-year results. The domestic earnings season continues at full pelt today with reports from Wesfarrmers, Fortescue, Crown Resorts, Wisetech, Domino’s Pizza, Tabcorp and Stockland.
US stocks closed mixed, but off their lows as record highs for Netflix and Google parent company Alphabet helped offset downward pressure from Apple. The S&P 500 finished ten points or 0.29 per cent in the red. The Dow shed 166 points or 0.56 per cent as it fell for a third session. The Nasdaq bucked the trend with an un uptick of almost two points or 0.02 per cent to a new closing high.
The most valuable company in the US by market capitalisation fell 1.83 per cent after announcing it would miss its second-quarter financial guidance. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” Apple said in a statement ahead of the resumption of US trade following the Presidents Day long weekend. The news yesterday morning Australian time helped pull the ASX 200 down 11 points or almost 0.2 per cent.
Apple suppliers and other tech companies dependent on Chinese production took a hit, even as the number of new cases of the virus reported each day trended lower. China’s Health Commission yesterday reported 1,886 new cases, down from more than 2,000 each day over the weekend.
Gold was the night’s big winner, breaking through $US1,600 an ounce for the first time in almost seven years as traders rotated into havens including precious metals and bonds. Gold for April delivery settled $17.20 or 1.1 per cent higher at $US1,608.20, a level last seen in March 2013. .
Australia’s largest miners were caught up in a general retreat from assets exposed to Chinese demand. BHP’s US-listed stock fell 0.25 per cent and its UK-listed stock 1.42 per cent. Rio Tinto gave up 0.11 per cent in the US and 0.96 per cent in the UK. The spot price for iron ore landed in China eased 95 cents or 1.1 per cent to $US89.15 a dry ton.
Industrial metals were also lowered by the risk-off mood. Benchmark copper on the London Metal Exchange slid 0.7 per cent to $US5,773 a tonne. Aluminium lost 0.1 per cent, nickel 2.2 per cent, zinc 1.2 per cent and tin 0.6 per cent. Lead bucked the trend, rising 1.3 per cent amid signs of tightening supplies.
Oil closed little changed as traders weighed reports of a slowdown in US production against questions over the likelihood that OPEC and its allies will agree to deeper production cuts to support prices. Brent crude edged up eight cents or 0.1 per cent to settle at $US57.75 a barrel. The US benchmark closed dead flat at $US52.05.
The dollar’s role as a liquid proxy for the Chinese economy saw it fall another 0.37 per cent overnight to 66.88 US cents.
Interim company earnings will be the main focus of the day ahead. Also due: a leading index of economic indicators at 10.30 am EST and the quarterly wage price index at 11.30 am. Scheduled in the US tonight are the minutes from the last Federal Reserve meeting, monthly producer inflation data, building permits and housing starts.
