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Asia report: Markets close red as Apple suppliers, HSBC tumble

By Josh White

Date: Tuesday 18 Feb 2020

Asia report: Markets close red as Apple suppliers, HSBC tumble

(Sharecast News) - Most markets in Asia finished lower on Tuesday, with Apple suppliers among the leading losers after the US-based technology giant issued a warning on its revenues.
In Japan, the Nikkei 225 was down 1.4% at 23,193.80, as the yen strengthened 0.15% against the dollar to last trade at JPY 109.72.

Of the major components on the benchmark index, automation specialist Fanuc was down 2.45% and technology giant SoftBank Group lost 4.89%, while Uniqlo owner Fast Retailing was ahead 0.56%.

Among the Apple suppliers in Japan, Alps Alpine was down 2.89%, Murata Manufacturing lost 3.41% and Taiyo Yuden was off 5.66%.

The California-based consumer technology behemoth warned overnight that it might not meet its quarterly revenue forecast, as the ongoing coronavirus outbreak in China was leading to both supply issues and a drop in demand in the Chinese market.

"Apple says it won't hit its second quarter revenue guidance of $63bn [to] $67bn due to the Covid-19 outbreak in China," said Neil Wilson, chief market analyst at Markets.com.

"In warning in this way Apple has neatly summed up the knock to global growth stemming from both reduced output and consumption."

Wilson said how anyone could be surprised by the news was beyond him.

"Clearly there is going to be a hit to both output and consumption in the world's second largest economy and the world's growth driver.

"This is bound to hit earnings of companies exposed - Apple being the bellwether."

The broader Topix index was off 1.31% by the end of its trading day in Tokyo, closing at 1,665.71.

On the mainland, the Shanghai Composite eked out gains of 0.05% to close at 2,984.97, and the smaller, technology-heavy Shenzhen Composite was 1.12% firmer at 1,856.56.

Authorities in China provided more clarity on its plans for tariff relief on US goods during the day, confirming it would accept applications for exemptions from American companies from 2 March.

The exemptions would apply to 696 categories of products being imported from the US, including crude oil, liquefied natural gas, pork and soybeans.

South Korea's Kospi was 1.48% weaker at 2,208.88, while the Hang Seng Index in Hong Kong was 1.54% lower at 27,530.20.

Both of the blue-chip technology stocks were in the red in Seoul, with Samsung Electronics down 2.76% and SK Hynix off 2.86%, as both were affected by Apple's announcement given they supply the company.

Suppliers to the firm were also in the red in Hong Kong, with Aac Tech 3.7% lower and Sunny Optical losing 4.85%, while in Taiwan, Apple's largest supplier Hon Hai Precision Industry - better known as Foxconn - was off 0.6%.

HSBC missed expectations in its 2019 results, which were released during the day, with pre-tax profit for the year coming in at $13.35bn and revenue being $56.1bn.

That profit figure fell short of expectations, with analysts widely forecasting a set of numbers broadly in line with 2018, when pre-tax profits came in at $19.89bn.

Shares in the Asia-focussed, London-based bank ended the session down 2.78% in Hong Kong.

Oil prices were lower as the region went to bed, with Brent crude last down 1.87% at $56.61 per barrel, and West Texas Intermediate falling 2.05% to $51.26.

In Australia, the S&P/ASX 200 was off 0.16% at 7,113.70, while across the Tasman Sea, New Zealand's S&P/NZX 50 rose 0.52% to end its session at 11,935.84.

The positive result from Wellington came as rural-focussed bank Heartland reported an improvement in its half-year profit, leading to a 2.2% rise in shares.

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.51% at AUD 1.4971, and the Kiwi retreating 0.64% to NZD 1.5635.

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