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Asia Pacific Shares Tumble on Apple Guidance Reduction, HSBC Pre-Tax Profit Miss

James Hyerczyk

The major Asia Pacific stocks indexes closed mostly lower on Tuesday after Apple Inc. said it will not meet its revenue guidance for the March quarter as the coronavirus outbreak slowed production and weakened demand in China.

The company said Monday it is “experiencing a slower return to normal conditions than we had anticipated” after the extended Lunar New Year holiday.

“…We do not expect to meet the revenue guidance we provided for the March quarter due to two main factors,” Apple said in a statement. “The first is that worldwide iPhone supply will be temporarily constrained.” “The second is that demand for our products within China has been affected.”

Apple also said, “The situation is evolving, and we will provide more information during our next earnings call in April. Apple is fundamentally strong, and this disruption to our business is only temporary. Our first priority – now and always – is the health and safety of our employees, supply chain partners, customers and the communities in which we operate.”

At 09:00 GMT, Japan’s Nikkei 225 Index settled at 23193.80, down 329.44 or -1.40%. Hong Kong’s Hang Seng Index finished at 27530.20, down 429.40 or -1.54% and South Korea’s KOSPI Index closed at 2208.88, down 33.29 or -1.48%.

China’s Shanghai Index settled at 2984.97, up 1.35 or +0.05% and Australia’s S&P/ASX 200 Index finished at 7113.70, down 11.40 or -0.16%.

HSBC Misses Expectations on 2019 Pre-Tax Profit

Europe’s largest bank, HSBC, reported a 33% fall in 2019 pre-tax profit to $13.35 billion after it took a goodwill impairment of $7.3 billion. The write down was related to its European investment banking and commercial banking businesses, HSBC said.

In terms of HSBC’s business in Asia, where the bank derives the bulk of its earnings, Quinn warned of pressure from the ongoing coronavirus outbreak.

“Since the start of January, the coronavirus outbreak has created significant disruption for our staff, suppliers and customers, particularly in mainland China and Hong Kong,” he said.

“Depending on how the situation develops, there is the potential for any associated economic slowdown to impact our expected credit losses in Hong Kong and mainland China,” he added. “Longer-term, it is also possible that we may see revenue reductions from lower lending and transaction volumes, and further credit losses stemming from disruption to customer supply chains.”

Energy, Tech Sectors Drag Down Australian Shares on Coronavirus Impact

The S&P/ASX 200 Index tumbled on Tuesday, led by losses in the energy and technology sectors, due to worries over the impact of the coronavirus epidemic on China’s economy and its global supply chains.

Apple Inc.’s warning that it will not meet its revenue forecast in the March quarter was the catalyst behind the 1.2 percent decline in Australia’s technology index.

Woodside Petroleum led the losses among energy stocks as oil prices declined due to demand worries put forth by the fears of the spreading virus.

RBA Policymakers Reviewed Further Rate-Cut Case, Worried About Borrowing, Coronavirus

The Reserve Bank of Australia (RBA) reviewed the case for a further interest-rate cut, but decided against it in order to avoid encouraging additional borrowing as house prices climb, minutes of its February 4 meeting in Sydney showed, Bloomberg reported.

The RBA also expects the coronavirus outbreak to “subtract from growth in exports over the first half of 2020,” the minutes released Tuesday showed. It acknowledged it was “difficult to assess potential indirect effects on activity” from the epidemic and devastating wildfires over summer as data were yet to be published.

The RBA also maintained an easing bias and reiterated its expectation rates were likely to stay low for “an extended period,” the bank retained a broadly upbeat view of the economy’s prospects.

This article was originally posted on FX Empire