FTSE drops as Apple sounds warning bell

The real toll of the coronavirus on businesses is starting to become more apparent now hitting risk sentiment

The real toll of the coronavirus on businesses is starting to become more apparent now that Apple has warned that it would not be able to meet its revenue target in March because of lower sales in China, but also because of production disruptions cause by stoppages at the company’s suppliers. A surprisingly high number of industries, particularly car makers, depend on components made in China and given that factories there have been shut for between one and three weeks, expect more companies to sound a warning about disruptions to their production over the coming weeks.

In contrast to Apple, HSBC pointed the finger of blame on Brexit, and to a lesser extent historically low interest rates around the world for a decline in the bank’s revenue and the decision to cut a whooping 35,000 jobs over the next two years. The coronavirus also received an honorable mention as one of the culprits but one that will only start affecting results in future quarters. 

Apple’s warning pulled down the FTSE in early trade and the sell-off in miners and travel firms added additional weight. Safe haven stocks like utilities and gold miners provided some counterbalance as did a bounce back from the embattled health operator NMC Health.

Brent declines as Russia avoids output cut

Brent crude prices lost just short of 2% as oil traders waited in vain for OPEC and Russia to agree on fresh production cuts. Crude oil rallied on Friday on hopes that Russia would agree to a proposal by OPEC’s technical committee to restrict OPEC+’s collective production by 600,000 bbl to balance out the loss in demand caused by the coronavirus. However, Russia successfully dragged its feet until news from Asia become less panicked and started to indicate that China would come back on line before the end of February.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.