FTSE 100 steadies after two days of steep losses
The FTSE 100 steadied after dropping to a 13-month low earlier in the day after two days of heavy losses prompted by growing fears over a coronavirus pandemic.
London’s blue-chip stock index fell 1.6 per cent to below 7,000 points to 6,903, its lowest point since February 2019, before recovering 0.1 per cent.
The FTSE 250 sank two per cent to 20,288 points before recovering somewhat to -0.5 per cent.
Since Monday morning, £115bn has been wiped off the FTSE 100.
Germany’s Dax is down 2.5 per cent while the French stock market Cac slipped 2.1 per cent.
South Korea coronavirus cases jump as Covid-19 hits Brazil
A spike in coronavirus cases in South Korea was the main driver behind the FTSE 100’s drop today.
South Korea registered a rise of 115 cases to push its total to 1,261. Meanwhile, reports emerged of the first suspected incident in Latin America.
However, the World Health Organization (WHO) has still not labelled the coronavirus outbreak a global pandemic.
But it did warn that most countries are “simply not ready” to contain the Covid-19 outbreak.
Meanwhile Brazil today reported its first case of coronavirus.
Diageo warns of £200m Covid-19 profit hit
Guinness brewer Diageo issued a £200m profit warning over the ensuing coronavirus chaos, saying it has led to bar and restaurant closures across Asia.
Neil Wilson, chief market analyst at Markets.com, said Diageo’s main issue was “that once the consumption picks up again in affected regions in China and beyond, you don’t then go and buy two bottles of Scotch instead of your normal one”.
And tour operator Saga led UK travel stocks lower. It fell 12.3 per cent on fears of Covid-19’s impact on airlines and holiday firms. Carnival, which owns the Diamond Princess cruise ship quarantined for two weeks, dropped 1.7 per cent.
Among the biggest fallers on the FTSE 100 in early trading was Easyjet, down more than 4.5 per cent. British Airways owner IAG is down 2.7 per cent while travel company Tui slipped 5.2 per cent. Airline stocks have suffered heavy losses this week as the threat of the virus spread in Europe.
Upper Crust owner SSP also issued a profit warning today, with its stores mainly located in airports and train stations. SSP’s shares declined 3.7 per cent as a result.
“These are neat examples of how there is a real demand destruction that occurs when the coronavirus hits – consumption that cannot be recovered,” Wilson added.
FTSE mired in sea of red over coronavirus outbreak
Spreadex financial analyst Connor Campbell said the FTSE 100 faces “another wall of red in its commodity sector”.
“The one sliver of hope for the FTSE is that currently the Dow Jones futures have the index jumping 100 points,” he added.
“There’s a long way to go until the bell rings on Wall Street, however, meaning they are going to have to stew in the global sickness for a bit longer yet.”
Meanwhile, mining company Rio Tinto said it is closely monitoring the Covid-19 outbreak. It warned of some short-term impact on its supply chains. Shares fell nearly two per cent.
Russ Mould, investment director at AJ Bell said: “The correction for equities reflects the reality that the impact of this outbreak is likely to be far-reaching and lead to pressure on company’s revenue and earnings.”
Coronavirus fears crippled global stock markets yesterday. European stocks sank around two per cent after falling over three per cent on Monday.
And the Dow Jones tumbled nearly 900 points as the US braced itself for a rise in coronavirus cases. The Trump administration told Americans to begin preparing for coronavirus to spread as outbreaks in Iran, South Korea and Italy escalated.
Coronavirus keeps on spreading outside China
The official death toll in Iran. The country is emerging as a global hotspot for the virus outside of China, rose to 16. The number of cases is short of 100 although it has been suggested that the number has been downplayed.
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The Iranian deputy health minister tested positive for Covid-19 yesterday. His diagnosis came a day after he said the outbreak was not as bad as people feared.
Several European countries confirmed their first coronavirus cases this week. All so far appear to be linked to the growing outbreak in Italy.
Italy is the worst affected European nation with more than 300 cases and 11 deaths.
Austria, Croatia and Switzerland said the cases involved people who had been to Italy. And a positive virus test has been recorded in Latin America – a Brazilian resident who had just returned from Italy.
Germany reported a new case involving someone who had recently visited northern Italy. This morning France confirmed the death of a 60-year-old man, the first French national to have died from the coronavirus.
The number of cases confirmed globally has passed 78,000 and the death toll stands at 2,715 people.