Yesterday (February 17) there was no session in the United States as the Americans celebrated President's Day. As a result, there was also no trading in shares on the New York Stock Exchange and Nasdaq or Chicago Mercantile Exchange. However, on a non-trading day, Apple announced negative news to investors.
We are talking about the further impact of the coronavirus on the supply chain and the production and sale of devices from the Cupertino company. If Apple may have problems, then others may also, but it may already be severe for the entire earnings season, which is still ahead of us because we are talking about the results for the first quarter of this year. Nevertheless, the market can potentially take these concerns into account right now. Apple has reported that factories in China are resuming production at a slower pace than expected, which raises concerns about the significant impact of the coronavirus outbreak on the economy. In addition, for the same reasons, the company warned investors that it did not expect to meet the revenue guidelines for this quarter.
Futures contracts on the US stock indices fall in the morning, after a terrible session in Asia, especially in Japan, where Nikkei 225 (JP225) fell by 1.5 percent. After the last fatal reading of GDP, investors are afraid that the Japanese economy would be in recession after the first quarter. Meanwhile, the central bank is already pursuing such a loose monetary policy that it may be difficult to find new tools to save markets and the economy.
Resumed economic concerns also hit commodity currencies, including the Australian dollar, especially after the publication of the minutes of the last RBA meeting. Policymakers believe that Australia's economic growth would soon be lower than projected three months earlier, partly due to the outbreak of the epidemic and bushfires. In addition, the possibility of another interest rate cut in Australia was analyzed before it was decided to leave interest rates unchanged. It was considered that the risk of such a movement at this time is greater than the possible benefits. However, this shows that there is still room for rate cuts in Australia as soon as things get worse. Therefore, it seems that as a consequence, the Australian and New Zealand dollar are the weakest currencies among the world's major currencies against the US dollar this morning.
Today, in the macroeconomic calendar, more important data are planned to be published from the UK labor market (at 10:30), the ZEW Economic Sentiment Index for Germany and the euro area (11:00) and the NY Empire State Manufacturing Index (14:30).
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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