Gold rose and global equity markets slid on Tuesday after Apple Inc said it was unlikely to meet its sales guidance because of the coronavirus outbreak in China, a warning highlighting the epidemic’s threat to global growth and corporate profits.
China reported its fewest new coronavirus infections since January and its lowest daily death toll in a week, but the World Health Organization said data suggesting the epidemic had slowed should be viewed with caution.
Chinese officials reported 1,886 new cases - the first time the daily figure has fallen below 2,000 since Jan. 30.
Apple said on Monday that manufacturing facilities in China that produce its iPhone and other electronics had begun to reopen, but were ramping up slower than expected.
The disruption in China will result in fewer iPhones available for sale around the world, making Apple one of the largest Western firms to be hurt by the outbreak.
Gold climbed more than 1 per cent to a two-week high as investors sought safety in the wake of Apple’s warning. The price of Brent, the global crude benchmark, fell below $57 a barrel but later rebounded on reduced supply from oil-rich Libya.
Forecasters, including the International Energy Agency (IEA), have cut 2020 oil demand estimates because of the virus.
Equity markets around the world fell, with MSCI’s all-country world index slipping 0.52 per cent.
Canada’s main stock index finished narrowly higher on Tuesday as Apple’s revenue warning underlined the impact of the coronavirus outbreak on global supply and demand.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 9.98 points, or 0.06 per cent, at 17,858.34.
Adding to the gloom, data on Tuesday showed Canadian factory sales decreased for the fourth straight month in December on lower sales in motor vehicle assembly, as well as aerospace product and parts.
The energy sector reversed early losses and closed up 0.2 per cent, while the financial and industrial sectors slipped 0.3 per cent and 0.7 per cent, respectively.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 2.1 per cent as gold futures rose.
Leading the index were Eldorado Gold Corp., up 10.5 per cent, Ballard Power Systems Inc., up 9.4 per cent, and B2Gold Corp., higher by 8.4 per cent.
Lagging shares were Bombardier Inc., down 10.6 per cent, Spin Master Corp., down 5.3 per cent, and Interfor Corp., lower by 5.2 per cent.
The Dow and S&P fell on Tuesday while the Nasdaq ended just above the unchanged mark as a sales warning from tech bellwether Apple highlighted the impact of the coronavirus outbreak on global supply chains.
The Dow Jones Industrial Average fell 165.89 points, or 0.56 per cent, to 29,232.19, the S&P 500 lost 9.87 points, or 0.29 per cent, to 3,370.29 and the Nasdaq Composite added 1.57 points, or 0.02 per cent, to 9,732.74
The pan-European STOXX 600 index lost 0.38 per cent and emerging market stocks lost 1.18 per cent.
HSBC Holdings PLC’s announcement that it would shed $100 billion in assets, shrink its investment bank and revamp its U.S. and European businesses in a drastic overhaul added to concerns about the impact of the coronavirus.
The UK-based bank, whose huge Asian operations are headquartered in Hong Kong, said the coronavirus epidemic had significantly impacted staff and customers. HSBC shares fell 6.35 per cent, leading the FTSE 100 index to close down 0.69 per cent.
“We’re seeing some renewed weakness in the stock markets following the announcement by Apple,” said Saxo Bank analyst Ole Hansen. “It’s having a global impact on supply chains and shipments - this will have a negative impact on growth expectations.”
Overnight in Asia, China’s CSI300 blue chip stocks index lost 0.5 per cent after gaining sharply on Monday, encouraged by a central bank rate cut and government stimulus hopes.
Japan’s Nikkei lost 1.40 per cent.
The dollar rose to nearly a three-week high against the euro after Germany’s ZEW survey of economic sentiment showed slumping investor confidence in Europe’s largest economy.
The euro was down 0.41 per cent to $1.079, while the dollar index rose 0.44 per cent. The Japanese yen was flat versus the greenback at 109.89 per dollar.
The ZEW research institute said in its monthly survey that investors’ mood deteriorated far more than expected in February on worries over the coronavirus’ effect on world trade.
The survey added to expectations the German economy will lose more momentum in the first half as slumping exports keep manufacturers mired in a recession.
Safe-haven German 10-year bond yields fell to -0.43 per cent at one point. Other 10-year bond yields in Europe fell similarly.
U.S. Treasury yields also fell. The benchmark 10-year note rose 11/32 in price, pushing its yield down to 1.5525 per cent.
Oil prices slid over the expected impact of the coronavirus on crude demand and a lack of further action by the Organization of the Petroleum Exporting Countries and allies to support the market.
Crude rebounded on the collapse of Libyan oil output since Jan. 18 because of a blockade of ports and oilfields.
Brent crude rose 8 cents to settle at $56.93 a barrel, while U.S. West Texas Intermediate crude settled flat, or unchanged at $52.05 a barrel.
U.S. gold futures settled 1.1 per cent higher at $1,603.60 an ounce.