Asian markets tumbled on Tuesday after Apple warned the new coronavirus had hit output and demand in China, fuelling fears over the wider impact of the epidemic on corporate earnings and economic growth. Investors looked past a positive lead from European bourses to focus on the spiralling fallout from the virus that has so far killed more than 1,800 people and infected nearly 72,500, mostly in mainland China.
As well as denting company bottom lines, the virus has sparked panic buying, economic jitters and the cancellation of high-profile sporting and cultural events. “Best to buckle in as we could be in for a bumpy ride (over) the next few weeks,” said Stephen Innes of AxiCorp. “I’m struggling to find any research report that doesn’t suggest (COVID-19) could significantly affect short term earnings.” Apple suppliers in Asia were hit by the tech giant’s warning that it would miss its quarterly revenue forecast because of the virus, dragging markets lower.
Tokyo’s benchmark Nikkei 225 index closed down 1.4 percent — its fourth straight session in the red — a day after data showed the economy shrank in the December quarter, even before the effects of the virus hit Japan. Hong Kong was down 1.3 percent as banking heavyweight HSBC reported a 33 percent fall in 2019 pre-tax profits alongside an announcement that it was cutting 35,000 jobs. Mainland China’s benchmark Shanghai Composite Index recovered earlier losses to close up 0.1 percent.
Elsewhere, Singapore fell 0.4 percent as investors digested the government’s decision to cut its economic growth forecast for this year. Seoul was off 1.5 percent and Taipei lost one percent. Sydney shed 0.2 percent.
China is the world’s biggest importer and consumer of oil, and crude prices have been particularly sensitive to the epidemic that has spread to nearly 30 countries and territories. Global oil demand will suffer its first quarterly drop in a decade as the virus lashes China’s economy and its impact ripples throughout the world, the International Energy Agency warned last week. Brent Crude fell one percent and West Texas Intermediate was down 0.7 percent. Gold, seen as a safe haven in times of uncertainty, was up 0.4 percent.