[Good Morning Stock Market] US Stock Market Highlights Concerns Over Earnings Decline Due to COVID-19

[Asia Economy Reporter Kum Bo-ryeong] The U.S. stock market highlighted concerns over poor earnings due to the novel coronavirus disease (COVID-19). Apple started lower after issuing an earnings warning amid supply chain disruptions and demand slowdown in China, which, along with fears of an economic slowdown, dampened investor sentiment. However, considering that the information was already known, a rebound buying wave emerged, narrowing the losses and resulting in a mixed close.

◆ Seo Sang-young, Kiwoom Securities Researcher = The U.S. stock market closed mixed due to Apple's warning and concerns over economic slowdown. Apple (-1.83%) forecasted strength outside China and in its services segment but warned of earnings weakness this quarter due to supply chain disruptions and store closures in China caused by COVID-19. Upon this news, market participants sold off amid heightened concerns over poor first-quarter earnings for individual companies due to COVID-19. In particular, Apple announced that although work has begun to resume, the pace of normalization is slower than expected, which could delay mass production of low-end smartphones, adding to the burden. However, since this was anticipated and some large tech stocks with limited sales exposure to China showed strength, the index decline was limited.

The U.S. administration's postponement of discussions on additional regulations against China and President Donald Trump's public indication of opposition to new regulations on China are positive factors. Additionally, Tesla (+7.30%) surged following Morgan Stanley's upward revision of its target price, and news that Samsung Electronics secured a 5G modem chip production contract from Qualcomm is expected to impact related stocks. Considering this, the Korean stock market is expected to rebound, showing differentiated trends among individual stocks and sectors.

◆ Kim Yu-mi, Kiwoom Securities Researcher = U.S. Treasury yields fell amid increased concerns over economic slowdown following Apple's downward revision of earnings guidance. The 10-year U.S. Treasury yield dropped to around 1.54% during the session, and the 30-year Treasury yield briefly fell below 2.0%. However, the decline in yields was limited as the stock market's losses narrowed in the afternoon and the New York State manufacturing index was reported positively.