Sharp losses at the start of the Tuesday session were prompted by Apple (NASDAQ:AAPL) issuing a profit warning, amid disruption caused by the outbreak of the Coronavirus.
The company’s Chinese stores and international delivery of stock have been hampered by the outbreak of the illness, and as such it said it expected to miss its $63-67 billion revenue target. This led to further dread in Asian equities, while European indexes began the day on a low note.
The company said it was suffering because of a ‘slower return to normal conditions’ than anticipated – ‘worldwide iPhone supply will be temporarily constrained’ because of outbreak-related manufacturing issues in China.
Apple soured
Providing some colour to the update, the company’s statement read:
“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company’s statement read.
“As a result, we do not expect to meet the revenue guidance we provided for the March quarter.”
“All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.”
“As the public health response to Covid-19 continues, our thoughts remain with the communities and individuals most deeply affected by the disease, and with those working around the clock to contain its spread and to treat the ill. Apple is more than doubling our previously announced donation to support this historic public health effort.”
“The health and wellbeing of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues.”
Following the update, the company’s shares are down 3.65% or $11.85 to $324.95 during pre-market trading 18/02/20. Its market cap stands at $1.42 trillion, while its dividend yield is modest at 0.95%.
Elsewhere on Tuesday
Commenting on early session movements, Spreadex Financial Analyst Connor Campbell commented,
“Tim Cook and co. weren’t the only ones sounding alarm bells on Tuesday. South Korea claimed it was facing an economic ‘emergency’ due to the illness, while in its half year update BHP Group (LON:BHP) maintained its guidance but stated it will revise its estimates if the virus isn’t ‘demonstrably well contained within the March quarter’. Glencore (LON:GLEN) also said it was monitoring the situation closely, after posting better than forecast full year earnings.”
“Though not disastrous, especially when compared to some of the losses seen early on in the outbreak, Europe nevertheless got off to a bad start. The FTSE barely held above 7400 as it fell 0.4%; the DAX shed 100 points, slipping from its all-time highs, while the CAC was back at 6050 following a 0.6% fall. Looking ahead a bit and the Dow Jones is facing an Apple-led 200 point drop when the bell rings on Wall Street.”
“Investors could get a further taste of what the economic atmosphere is like regarding the coronavirus with the latest ZEW economic sentiment readings. The German figure is forecast to drop from 26.7 to 20.0, with the Eurozone-wide number down from 25.6 to 21.3.”
“Sterling was also down this Tuesday, slipping 0.2% against dollar and euro alike ahead of the morning’s UK jobs data. Wage growth, including bonuses, is expected to fall from 3.2% to 3.1% month-on-month, with the claimant count change up from 14.9k to 20.2k. As for the unemployment rate, that’s expected to remain unchanged at 3.8%.”