25th Feb 2020 16:55
(Alliance News) - London stocks started Tuesday's session with moderate gains, but this quickly gave way to a further sell-off as the spread of coronavirus in Europe continued to spook investors.
The FTSE 100 index closed down 138.95 points, or 1.9%, at 7,017.88 on Tuesday. The index of large-caps plummeted 3.3% on Monday.
The FTSE 250 ended down 401.90 points, or 1.9%, at 20,715.97, and the AIM All-Share closed down 13.12 points, or 1.4%, at 929.82.
The Cboe UK 100 ended down 1.9% at 18,687.58, the Cboe UK 250 closed down 1.8% at 11,889.44, and the Cboe Small Companies ended down 0.8% at 12,283.77.
In European equities on Tuesday, the CAC 40 in Paris and DAX 30 in Frankfurt both ended down 1.9%.
"The morning bounce in European markets and US futures is a distant memory, as indices push to new lows thanks to the ongoing spread of the coronavirus," said Chris Beauchamp, chief market analyst at IG.
China reported 508 new cases and another 71 deaths on Tuesday, 68 of them in the central city of Wuhan, where the epidemic was first detected in December.
The updates bring mainland China's totals to 77,658 cases and 2,663 deaths, while South Korea now has the second highest number of cases in the world with 893 and eight deaths. Iran said its coronavirus outbreak, the deadliest outside China, had claimed 15 lives and infected nearly 100 others – including the country's deputy health minister.
Civil protection officials on Tuesday reported a large jump of cases in Italy, from 222 to 283, with seven deaths.
"The spread of the virus to Europe was always likely to be viewed as a much more worrying event than the broader outbreak in China, since the kind of draconian measures available to the Communist Party will be all but impossible to implement in the EU," IG's Beauchamp said. "However, given adequate containment efforts the West's high standard of medical care will act as a powerful firebreak to any outbreaks."
Stocks in New York were in the red at the London equities close, with the Dow Jones, S&P 500 index and Nasdaq Composite all 0.9% lower.
Despite Tuesday's risk aversion in markets, the price of gold dipped.
Gold was quoted at USD1,646.81 an ounce at the London equities close Tuesday against USD1,671.11 at the close on Monday.
"Gold is continuing to pare gains on Tuesday, even as we see broad risk aversion across the markets. Gold has been on a stunning run this month so perhaps we're just seeing a little profit taking after it came close to USD1,700. There could also be a knock-on effect from the severity of the declines across the globe on Monday, but it's tough to say for sure," said Craig Erlam at Oanda.
Fellow safe haven, the Japanese yen, fared better. Against the yen, the dollar was trading at JPY110.12 compared to JPY110.56 late Monday.
Elsewhere in forex, the pound and euro were also higher against the dollar.
The pound was quoted at USD1.3009 at the London equities close Tuesday, compared to USD1.2928 at the close on Monday. The euro stood at USD1.0879 at the European equities close Tuesday, against USD1.0862 at the same time on Monday.
Oil remained soft. Brent oil was quoted at USD55.50 a barrel at the London equities close Tuesday from USD55.65 late Monday.
London-listed travel stocks were again the worst performers on Tuesday amid coronavirus worries, with cruise operator Carnival closing down 6.0% and tour operator TUI down 4.8%. The two had closed down 6.8% and 9.8% respectively on Monday.
Airlines were also lower, with easyJet shares shedding 3.5% after Monday's 17% slump and Ryanair down by 2.5% after falling 16% in the previous session.
Another faller in the FTSE 100 was Meggitt, ending down 5.6%. The aerospace parts maker warned of a difficult 2020 due to the continued grounding of the Boeing 737 MAX aircraft and the coronavirus outbreak.
Meggitt reported revenue of GBP2.28 billion in 2019, up 9.6% from GBP2.08 billion in 2018, lifting pretax profit 33% to GBP286.7 million from GBP216.1 million.
Looking ahead, Meggitt said "sector specific factors" including the production halt of the grounded Boeing 737 MAX and supply chain disruption, as well as the "wider macroeconomic impact" of coronavirus are expected to hold back margin progression in the short-term. Meggitt expects 2020 organic revenue growth in a range of 2% to 4% and 2020 underlying operating margin improved by 30 to 50 basis points.
FTSE 250-listed SIG slumped 18% as Chief Executive Meinie Oldersma and Chief Financial Officer Nick Maddock both resigned with immediate effect.
The FTSE 250-listed construction products supplier said Steve Francis will become CEO, also with immediate effect, on an initial contract until the end of 2020. Francis served as CEO of scandal-rocked Patisserie Holdings from mid-November 2018 to February 2019. Prior to joining Patisserie, Francis led the turnaround of printing equipment supplier Danwood Group Holdings as CEO.
David Madden at CMC Markets said: "The stock price has been has been hammered in recent months on account of a profit warnings in October plus January. The update today knocked investment sentiment even further as the two new senior executives will have the pressure on them to come up with a turnaround plan quickly."
Elsewhere in London, De La Rue surged 21% after unveiling details of its three-year turnaround plan and reiterated its annual guidance.
The Basingstoke-headquartered banknotes and passports printer said trading during the second half of its current financial year for both divisions - Currency and Authentication - has been "satisfactory".
Turning to the turnaround plan, De La Rue said it plans to return its Currency unit to "progressive" margin growth from financial 2021, helped by cost reductions, and investment in polymer and related features. De La Rue also said it is targeting continued strong year-on-year growth of its Authentication business, driven by further, largely project-related, investment.
Wednesday's corporate calendar sees annual results from miner Rio Tinto, housebuilder Taylor Wimpey, bookmaker William Hill, outsourcer Serco and lender Metro Bank.
In the economic calendar for Wednesday, the British Retail Consortium shop price index is at 0001 GMT, while French consumer confidence is at 0745 GMT.
By Lucy Heming; [email protected]
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