6th Mar 2020 12:09
(Alliance News) - Stocks in London were deeply in the red at midday on Friday due to heightened panic over coronavirus and fears of the damage the epidemic will cause to world economic growth.
World Health Organisation officials have warned that countries are not taking the coronavirus crisis seriously enough as outbreaks surged across Europe and in the US where medical workers sounded warnings over a "disturbing" lack of hospital preparedness.
Global markets tumbled over concerns about the affect on the global economy and as countries take more drastic steps to prevent contagion of a disease that has killed more than 3,300 people and infected nearly 100,000 in about 85 nations.
Cases soared in Italy, France, Greece and Iran, while a cruise ship was held off the Californian coast to test passengers showing symptoms of the disease - echoing an episode in Japan several weeks ago that saw hundreds infected on a luxury cruise ship.
The FTSE 100 index was down 215.67 points, or 3.2% at 6,490.76. The large cap index is on track to end the week 1.6% lower.
The FTSE 250 was down 664.62 points, or 3.4% at 18,658.81, and the AIM All-Share was down 24.06 points, or 2.8% at 851.77.
The Cboe UK 100 was down 3.5% at 11,002.15, the Cboe UK 250 was down 3.7% at 16,610.88 and the Cboe Small Companies was down 1.2% at 11,485.37.
In Paris the CAC 40 was down 4.2%, while the DAX 30 in Frankfurt was 4.0%.
"Non-stop news headlines about the spread of coronavirus has caused investors to be very concerned about a global recession. This tension is likely to remain front and centre until we get some evidence that the virus can be contained. Central banks have already begun to cut interest rates and further action is expected over the coming months to help businesses and economies," said AJ Bell Investment Director Russ Mould.
On the London Stock Exchange, Russian gold miner Polymetal International was the best performer among two blue chip risers, up 2.5%, tracking spot gold prices higher.
Gold was quoted at USD1,683.10 an ounce at midday, up from USD1,658.87 at the London equities close on Thursday, as the demand for the safe-haven asset increased amid virus fears.
Conversely, airlines were once again among the blue chip fallers over fears of the coronavirus on global travel.
TUI was down 5.8%, International Consolidated Airlines was down 5.0% and easyJet was down 4.9%.
"As investors try to work out what could be the short- and long-term impact of the COVID-19 outbreak upon the global economy, corporate profits and therefore share prices one sector in particular has taken a fearsome battering. The global airline sector's market capitalisation has dropped by USD40.6 billion, or 25%, in the last month alone," said AJ Bell's Mould. "The sector's valuation now stands at a five-year low and 45% below its January 2018 peak of USD205 billion, as benchmarked by the S&P Global 1200 airlines index."
In the FTSE 250, Cineworld Group was down 7.5%. Citigroup downgraded the multiplex operator to Neutral from Buy, after the release of the new James Bond movie 'No Time To Die' was pushed back to November due to coronavirus fears.
The cinema chain attempted to reassure investors over its finances as it said it has not seen any material impact so far on theatre admissions from the spread of coronavirus.
For 2019, the company anticipates reporting revenue of USD4.37 billion, up 6.1% from USD4.12 billion recorded in 2018. Adjusted earnings before interest, tax, depreciation and amortisation is penned at USD1.03 billion, up 12% from USD925.4 million. Net debt, excluding lease liabilities, is predicted at USD3.48 billion versus USD3.73 billion.
Annual results are slated to be released by the company on Thursday next week.
Although the latest James Bond movie release has been delayed to November due to closure of cinemas in Asian markets, movie studios have advised Cineworld that they currently remain committed to their release schedule for the coming months and remainder of 2020, the company said.
The pound was quoted at USD1.2995 at midday, up from USD1.2922 at the London equities close Thursday.
The euro stood at USD1.1311 at midday, up from USD1.1185 late Thursday, following positive economic data from the continent.
German factory orders improved substantially in January following December's slump, Destatis reported. Factory orders were 5.5% higher in January on the month before, largely due to orders in the aerospace and machinery and equipment industries. This followed a 2.1% slump in December.
Annually, orders were down 1.4%, though this marked a significant improvement on the 8.9% annual tumble recorded for December. Consensus, according to FXStreet, had pencilled in just a 1.4% month-on-month rise and a 7.6% annual decline.
Against the yen, the dollar was trading at JPY105.44, down from JPY106.73 late Thursday.
US stock market futures were pointed to a sharply lower open ahead of the release of the US jobs report for February at 1330 GMT.
The DJIA was called down 2.1%, the S&P 500 index down 2.4% and the Nasdaq Composite down 2.7%.
Nonfarm payrolls are expected to rise by 175,000 in February following January's 225,000 increase, while the US unemployment rate is expected to be unchanged at 3.6%.
"Ultimately markets know that the growing number of coronavirus cases in the US will inevitably play a role in dragging growth and jobs numbers lower if it continues to spread. Thus, any figures will be taken with a pinch of salt in the knowledge that things are likely to be progressively worse in the months ahead," said IG Group.
On the corporate front, Starbucks said the coronavirus outbreak is expected to hit earnings in the second quarter. The coffeehouse chain said Starbucks China's comparable store sales were down 78% in February on a year ago, primarily due to store closures, reduced operating hours and "severely reduced" customer traffic.
Brent oil was quoted at USD48.15 a barrel at midday, down from USD50.91 at the London equities close on Thursday. The North Sea benchmark sank to an intraday low of USD47 in morning trade - its lowest level since July 2017.
News that OPEC ministers on Thursday had recommended a huge production cut of 1.5 million barrels a day to offset the affects of the virus was unable to provide oil prices with any relief. Russia's oil minister returns to Vienna on Friday for a tense meeting with the country's OPEC allies.
"Russia is putting up strong resistance to the deal which is threatening to seriously undermine it. This may just be a case of playing hardball in order to reduce the burden it must shoulder but a deal without Russia is unlikely to keep traders on board for very long. I'm optimistic that Russia will come through late in the day but given the broader market sentiment right now, I'm not sure just how much of a lift it will give prices, or whether it just further reinforces the floor below," OANDA Markets analyst Craig Erlam commented.
By Arvind Bhunjun; [email protected]
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