• China reported an additional 1868 coronavirus cases and 98 additional deaths, 1701 patients were discharged
• Apple (AAPL) issued a profit warning and does not expect to meet revenue guidance for Q1 amid the coronavirus outbreak
• RBA Minutes largely echoed the statement but also highlighted that Coronavirus is a “material” risk to the Chinese economy and hence Australia
• Asian equities traded lower across the board whilst US equity futures gapped lower at the open
• In FX, DXY and JPY remained firm, AUD and NZD lagged post-RBA minutes, USD/CNH eclipsed 7.0000
• Looking ahead, highlights include UK Jobs, German ZEW, US NY Fed Manufacturing, Japanese Trade Balance, ECB’s Panetta & Fed’s Kashkari and supply from Germany
• Earnings include Walmart, Agilent, HeidelbergCement, InterContinental Hotels

CORONAVIRUS UPDATE

China's Hubei province reports 1807 new coronavirus cases and 93 additional deaths as of February 17th vs. 1933 additional cases and 100 additional deaths on February 16th; Virus deal toll rises to 1800 vs. Prev. 1770. China reported an additional 1868 coronavirus cases and 98 additional deaths in the Mainland as of February 17, vs. 2048 additional cases and 105 deaths on February 16: Total Mainland cases at 72436 (Prev. 70548) and death toll at 1789 (Prev. 1770), while 1701 cured patients were discharged. China Global Times reported the number of patients infected with Coronavirus will likely peak during the second half of February in southern China; nationwide, the peak is seen in in April, according to the central government’s top medical advisor. (Newswires)

Apple (AAPL) issued a profit warning in which it does not expect to meet revenue guidance for the March quarter citing the coronavirus outbreak. Co. is experiencing a slower return to normal conditions than had anticipated and notes of slower demand in products in China alongside iPhone supply constraints. Co. said it will provide more information during its next earnings call in April and said the Co. is fundamentally strong and any disruptions to business is temporary. (Apple/Newswires) NOTE: Apple has an 11.64% weighting in NASDAQ 100, 7.5% in the DJIA, and 4.8% in S&P 500.

Tests for a coronavirus drug made by Gilead (GILD) are going slower than hoped amid struggles to recruit qualified patients, according to WSJ. (WSJ) Gilead's drug was seen as a promising remedy to tackle coronavirus. Elsewhere, Japanese Government Spokesman Suga said they soon aim to start trials using HIV treatment for coronavirus. (Newswires) Prior recent reports noted that HIV treatments have been showing positive signs against infected patients in China

US State Department official stated the incubation period for the coronavirus ranges from 2 to 14 days, with a median of 5-6 days. (Newswires) CDC has listed 467 people in 42 states in the US under investigation for the novel coronavirus. Of them, 15 have tested positive, 392 negative, and 60 are still pending, (CNN)

Hong Kong Chief Executive Lam said Hong Kong fund to tackle the virus outbreak has increased to HKD 28bln (Prev. HKD 25bln). (Newswires) South Korean President Moon called for 'special' economic policy measures to cope with 'emergency' situations caused by coronavirus, current economic situation is 'more serious' than thought, via Yonhap. (Newswires)

ASIA-PAC

Asia-Pac equities traded with losses across the board following a non-existent lead from Wall Street, but as sentiment was dented following a profit warning by Apple, citing the coronavirus outbreak. At the electronic open, major US equity futures experienced downside, with Nasdaq Mar’20 futures immediately giving up the 9600 mark as Apple carries an 11%+ weighting in the index. ASX 200 (-0.2%) was led lower by broad losses across the majority of its stocks in the index, and with material names pressured amid a pullback in base metal prices and as mining-giant BHP traded lower despite topping Adj. EBITDA and underlying profit forecasts, as the miner anticipates net demand losses in the near term amid the virus outbreak. Nikkei 225 (-1.4%) conformed to the overall risk tone but underperformed the region throughout a bulk of the session amid currency dynamics, and with Nissan shares under renewed pressure after its CEO foresees challenges to earnings and cashflow for the remainder of the FY. Other notable movers from the Apple fallout included Samsung Electronics, Taiwan Semiconductor, SK Hynix and Pegatron whose shares all traded lower by 1.5-3.0%. Elsewhere, Hang Seng (-1.5%) and Shanghai Comp (-0.4%) joined the downbeat performance across the region, with the former weighed on by its heavyweight financials and oil-giants, whilst the latter fared slightly better following yesterday’s PBoC stimulus injection.

PBoC set USD/CNY mid-point at 6.9826vs. Exp. 6.9832 (Prev. 6.9795) (Newswires) PBoC drained a net CNY 220bln on the day

China said it is to receive applications for tariff exemptions for certain products from the US, as expected. Products include pork, beef and soybean - effective for one year. (Newswires)

UK/EU

UK’s Chief Brexit Negotiator Frost said the central vision for the UK is to be able to set its own laws, to think that UK might accept EU supervision on level playing field is wrong and that the UK would not extend transition period beyond 2020, according to a draft. Frost added that tying UK to EU rules would undermine public backing for UK Government at home and UK expects open and fair competition based on FTA with EU. Frost also said the EU must endorse relationship of equals if it wants sustainable relationship with the UK. (Newswires)

UK PM Johnson and Chancellor Sunak are reportedly mulling cutting the rate of pension tax relief for higher earnings to 20% from 40%, which could raise GBP 10bln per annum, according to the Times. (Times) This also follows recent reports that Sunak is considering abandoning current fiscal rules that control day-to-day spending and ensure the government aims to reduce debt levels.

Number 10 Adviser Andrew Sabisky has resigned after a string of controversial posts were uncovered. (Sky News)

FX

In FX, DXY initially pulled back amid the Apple profit warning, and thereafter recouped losses - potentially on haven properties, before eclipsing the prior session’s 99.210 high. USD/JPY and JPY-crosses experienced mild safe-haven inflows after Apple’s announcement caused jitters across the market, although the move in the pair was modest at the time. EUR/USD traded flat throughout a bulk of the session before the firmer Buck took the pair further below 1.0850 ahead of the German ZEW survey. GBP/USD held onto a bulk of the prior session’s loses as the concerns regarding the divide between EU-UK trade talks resurfaced – and with UK’s Chief Brexit Negotiator Frost reiterating that there will be no extension to the transition period despite countless warnings from EU officials regarding the lack of time to agree on a deal. GBP/USD meandered around the 1.3000 mark, with the pair’s 10 DMA seen around 1.2975, with traders now eyeing the UK labour market report. Meanwhile, Antipodeans were initially pressured amid overall risk aversion heading into the RBA minutes, which largely reiterated with Statement and Governor Lowe’s comments, but added that the coronavirus is a “material” risk to the Chinese economy and thus Australia. Hence, AUD/USD saw more pronounced selling with the pair losing its 0.6700 status, whilst the Kiwi also felt the China contagion, with NZD/USD heading towards 0.6400 to the downside in sympathy. Finally, the overall risk sentiment coupled with a firmer Dollar saw USD/CNH briefly top 7.0000 to the upside.

RBA Minutes (Feb) reiterated that the Board discussed the case for further easing, chose to hold given that rates are already low and repeated that the Board remained prepared to ease further if needed. The minutes also highlighted that Coronavirus is a “material” risk to the Chinese economy and hence Australia, whilst reiterating that there was uncertainty around estimates of the effects of the bushfires and the coronavirus outbreak and it’s too early to judge virus impact. The release noted that economic drag from bushfires to be felt in Q4 and Q1, full recovery expected by year-end and it’s reasonable to expect that an extended period of low-interest rates would be required in Australia to reach full employment and achieve the inflation target. Finally, the minutes repeated that the outlook remained for the Australian economy to improve due in part to housing pick-up. (Newswires)

COMMODITIES

WTI and Brent futures saw renewed pressure overnight as sentiment deteriorated following Apple’s warning that it will not achieve its Q1 target amid the virus outbreak. Prices gapped lower at the open having failed to settle in the prior session amid US market closures, with WTI and Brent front-month futures eroding the prior session’s mild gains as the former breached USD 52/bbl to the downside whilst the latter fell to a briefly gave up its USD 57/bbl handle. Elsewhere, spot gold retained an underlying bid amid the risk-aversion in the market, with prices edging closer to 1590/oz with potential resistance ~1588.50 (27th Jan high). Copper prices moved in tandem with the risk sentiment and shaved some of the prior session’s gains.

Libya’s NOC said its oil production stood at 135,745 BPD on Monday 17th vs. 163,684 on Thursday 13th. (Newswires)

China Trade Body said some customers in Russia, Turkey, Middle East and North Africa have stopped accepting China metals products deliveries amid the virus outbreak. (Newswires)

US 

Top Trump administration officials are in discussions to reassign deputy national security adviser Victoria Coates to the Department of Energy from the National Security Council, according to sources cited by Axios. (Newswires)