Global markets continue to be hit by coronavirus fears as shares slump, South Korea declares economic ’emergency’ and oil price drops
- Apple’s Frankfurt-listed shares dropped by five per cent and suppliers also fell
- South Korean president Moon Jae-in said economy was in ’emergency situation’
- Outbreak is also posing a threat to Japan which is already facing recession fears
The economic impact of coronavirus grew stronger today as European tech shares slumped while South Korea warned of an economic ’emergency’.
Apple’s Frankfurt-listed shares dropped by nearly five per cent after the company said it would fall short of its quarterly sales outlook because of the outbreak.
Firms who make chips and other components for Apple also dropped in value because of China’s large presence in the supply chain.
In Asia, South Korean president Moon Jae-in said the economy was in an ’emergency situation’ because the epidemic had disrupted demand for his country’s goods.
The outbreak is also posing an increasing threat to Japan, the world’s third-largest economy, which is already gripped by recession fears.
Meanwhile oil fell to below $57 a barrel on Tuesday as experts said the outbreak had ‘spooked’ the markets.
A man wearing a protective mask walks in front of a display board at the Shanghai Stock Exchange, as markets continue to feel the impact of the virus outbreak
Apple issued its revenue warning after finding that factories which make iPhones have resumed production more slowly than expected.
Many employees were prevented from returning to work because of drastic travel restrictions in China during an extended Lunar New Year break.
Stacy Rasgon, an analyst, said Apple’s woes probably mean fewer chips will be sold throughout the industry because the overwhelming majority are made in China.
‘Maybe this is the wake up call. I would be astonished if Apple is the only one,’ he said. ‘Every electronic supply chain runs through China in a big way.’
Shares in Apple’s chip suppliers fell on the news, including Samsung Electronics, Taiwan Semiconductor Manufacturing Co and SK Hynix.
The technology-heavy German stock index plunged 0.8 per cent today, while the European tech index fell 1.4 per cent.
‘This has spooked market players and triggered a sharp pullback in risk assets,’ said Tamas Varga, of oil broker PVM, referring to Apple’s statement.
Other China-exposed sectors in Europe, such as automobile and basic resources, dropped more than one per cent each.
People wearing face masks walk past an Apple store in Beijing. The tech firm has said it will miss its quarterly sales outlook
Oil fell below $57 a barrel on Tuesday, pressured by concerns over the impact on oil demand from the outbreak.
Forecasters including the International Energy Agency (IEA) have cut 2020 oil demand estimates because of the virus.
‘Risk aversion has returned to the markets,’ said Commerzbank analyst Carsten Fritsch.
In South Korea, president Moon Jae-in today called for ’emergency measures’ to tackle an ’emergency situation’.
‘The current situation is very serious, even more so than thought,’ he said.
Moon has demanded action to support companies dependent on trade with China and to encourage consumers to spend more.
Japan has announced plans to use HIV drugs to combat the virus as the growing number of cases poses an increasing threat to the world’s third-largest economy.
With Japan’s economy contracting, raising the risk of a recession, the spread of the coronavirus has prompted Tokyo to put limits on public crowds.
In addition, some companies have begun to urge employees to work from home.
Central banks across the region have already begun slashing interest rates to help ease credit as tourism arrivals plunge.