Stocks, bond yields decline after Apple warning: markets wrap

Asian stocks fell with US futures and bond yields after Apple said quarterly sales would miss forecasts, illustrating the blow to corporate earnings and economic growth from the deadly coronavirus.

Equity benchmarks in Tokyo, Seoul and Hong Kong saw declines of over 1%. Sydney and Shanghai saw more modest drops. Apple suppliers including TDK and Tokyo Electron slumped after the iPhone maker warned on both production and sales disruptions due to the epidemic. Ten-year Treasury yields slumped as trading restarted following a US holiday Monday. Australia’s dollar dropped after the central bank said it had discussed cutting interest rates two weeks ago.

Tuesday’s trading session saw renewed concerns about the coronavirus impact, even as the growth rate of cases in China’s Hubei province the epicenter of the disease continues to stabilise. It’s a turnaround from Monday, when sentiment was lifted by Chinese policy makers’ moves to support companies hit by the prolonged shutdown of large parts of the country. China’s stocks had recouped all of their losses following the Lunar New Year holiday.

“So far I believe that most of what we are seeing is delayed consumption,” Andy Kapyrin, a partner at RegentAtlantic Capital, told Bloomberg TV. If the scenario turns into destruction of demand, that “can start to have serious economic ramification,” Kapyrin said.

In a statement late Monday, Apple said that while work is starting to resume in China, “we are experiencing a slower return to normal conditions than we had anticipated.” Global iPhone supply will be “temporarily constrained,” the company said.

The Australian dollar weakened after the Reserve Bank of Australia said it reviewed the case for a further rate cut at its last meeting, but didn’t go ahead — to avoid extra borrowing as house prices rise. Elsewhere, Brent crude fell, and sterling was under pressure amid concerns about the challenges in looming UK-European Union trade talks.

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