Global stocks slumped Friday after Apple and Amazon.com reported earnings that highlighted the impact the coronavirus pandemic is having on the world’s biggest companies.
Futures linked to the S&P 500 fell 2% early Friday, suggesting U.S. markets could open lower and extend Thursday’s losses. The U.K.’s FTSE 100 dropped just over 2%. Japan’s Nikkei 225 closed down 2.8% and Australia’s S&P/ASX 200 ended 5% lower. Markets in China, Hong Kong and across most of Europe were closed for the May Day holiday.
On Thursday, Amazon announced record revenue but disappointed on profits as coronavirus-related costs such as employee testing and higher wages added to expenses. Apple held off on providing guidance for the current quarter for the first time since late 2003. Both stocks have led markets higher in recent weeks.
“It’s a warning shot across the bow that no company is immune from this even if you’re able to raise your top-line revenues,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds.
Ahead of the opening bell in New York, shares in Apple dropped 3% in off-hours trading and Amazon fell 5.5%.
U.S. stock benchmarks clocked their largest percentage gains since 1987 last month. The S&P 500 was up 12.7% in April, while the Dow Jones Industrial Average gained 11.1%. The tech-heavy Nasdaq Composite jumped 15.5%, its biggest monthly gain since June 2000.
“If you have been involved in the market, there’s a few reasons to take a little bit off the table and a pullback would be healthy,” said Chris Weston, head of research for Pepperstone brokerage in Australia.
Adding to investor jitters Friday were concerns about fresh tensions between the U.S. and China. In an unusual public statement, a U.S. intelligence agency said Thursday that it was investigating whether the coronavirus may have escaped from a laboratory in Wuhan,
“The important thing for investors is that these tensions around trade, these tensions around technology and technology transfers, and tensions around geopolitics more broadly, these issues are going to persist and maybe even heighten as we go forward,” said Joseph Little, chief global strategist at HSBC Global Asset Management.
Investors will watch closely as a string of companies publish results Friday, including energy majors Exxon Mobil and Chevron.
Mike Bell, global market strategist at J.P. Morgan Asset Management, said the recent rally in U.S. stocks didn’t reflected the gloomy picture painted by economic data.
“There is such a risk from here that perhaps the reopening of the economy, at least in a sustained way, takes longer than the market and people had hoped for,” said Mr. Bell.
Brent crude, the global oil benchmark, dropped 1.8% to $26.02 a barrel, a muted move given wild swings in energy markets in recent weeks. Analysts expect demand for fuel to rise as lockdown rules are gradually lifted and supply eases as output cuts agreed by the Organization of the Petroleum Exporting Countries come through.
The yield on the 10-year U.S. Treasury note fell to 0.608% from 0.619% Thursday. Yields fall as bond prices rise.