Global markets fell overnight after tech giant Apple warned it would miss its quarterly sales target due to the impact of the coronavirus outbreak.
Market snapshot at 8:20am (AEDT):
- ASX SPI futures +0.1pc at 7,050, ASX 200 (Tuesday’s close) -0.2pc at 7,113
- AUD: 66.86 US cents, 51.42 British pence, 61.94 Euro cents, 73.45 Japanese yen, $NZ1.047
- US: Dow Jones -0.6pc at 29,232, S&P 500 -0.3pc at 3,370, Nasdaq +0.02pc at 9,732
- Europe: FTSE 100 -0.7pc at 7,382, DAX -0.75pc at 13,681, CAC -0.5pc at 6,056, Euro Stoxx 50 -0.3pc at 3,511
- Commodities: Brent crude flat at $US57.70/barrel, spot gold +1.3pc at $US1,602.18/ounce
Locally, the major focus for Australian investors remains company profit reporting season, with a slew of major companies releasing their results today.
Travel company Webjet reported a 64 per cent drop in profit to $9 million, after the business was forced to write off $44 million due to the collapse of Thomas Cook, which was a customer of its WebBeds business.
Underlying earnings increased 43 per cent to $86.3 million and shareholders will receive an interim dividend of 9 cents per share.
Webjet said there had been some impact on bookings due to the coronavirus outbreak, which was expected to impact the current half of the financial year.
Miner Fortescue has unveiled a 281 per cent surge in its half year profit to $US2.5 billion ($3.67 billion).
Higher iron ore prices, after a dam disaster in Brazil last year closed several mines, boosted revenue, with Fortescue’s average realised iron ore price increasing to $US80 per dry metric tonne, compared to $US47 a year earlier.
Fortescue shareholders will receive an interim dividend of 76 cents per share, up from 30 cents for the same period in the previous year.
In economic news, the Bureau of Statistics is set to release the wage price index for the final quarter of 2019.
Economists have forecast a quarterly rise of 0.5 per cent, the same as in the previous quarter, leaving the annual pace of wage growth unchanged at 2.2 per cent.
“We see little reason for the [wage price index] to deviate much from its recent subdued quarterly pace,” RBC Capital Markets wrote in a note.
“Annual wages growth has been stuck at 2.25 per cent for over 12 months reflecting both cyclical slack and structural headwinds. There are few reasons to expect this to change any time soon.”
Apple warning rattles global tech stocks
Apple’s announcement hit Australian tech stocks on Tuesday, with the sector closing more than 1 per cent lower, while markets in Japan, South Korea and Hong Kong posted sharp falls.
In an update on its quarterly guidance, the company said there had been a slower than anticipated return to work in China, following the extended Chinese New Year holiday, which had “temporarily constrained” iPhone supply.
“While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated,” Apple said.
“These iPhone supply shortages will temporarily affect revenues worldwide.”
Apple also warned demand for its products within China had been affected, due to store closures and reduced operating hours.
“The situation is evolving … Apple is fundamentally strong and this disruption to our business is only temporary,” it said.
The pessimism of the Asian session extended to the European session, as shares in suppliers of components to Apple fell, along with shares in other chipmaker stocks.
In the US, Wall Street resumed trade after a long weekend. The Dow Jones and the S&P 500 closed lower, while the Nasdaq edged into positive territory, gaining just 1 point.
Apple shares ended the session 1.8 per cent lower, as did shares in Apple supplier Qualcomm.
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