FTSE 100 makes late dash to close higher as markets look to recover from virus fears sell-off

Footsie closed up around 24 points at 7,042. FTSE AIM 100 lost over 91 points at 4,624.

Rio Tinto plc - FTSE 100 expected to fall as coronavirus fears mount
"US stock markets have led the way higher today....," noted Joshua Mahony, senior market analyst at online trader IG
  • FTSE 100 closes up 24 points
  • Wall Street shares higher
  • Markets attempt rebound following selloffs

5pm: FTSE 100 rebounds

FTSE 100 index closed Wednesday higher having been lower most of the day, taking the cue from Wall Street where stocks gained.

Footsie closed up around 24 points at 7,042.  Conversely, the midcap FTSE 250 sank 93 points at 20,622.

FTSE AIM 100 lost over 91 points at 4,624.

The  Dow Jones Industrial Average  surged over 385 points while the S &P 500 added nearly 50  points as markets sought calm from the coronavirus sell-off.

"US stock markets have led the way higher today, as the coronavirus fears of recent days are put on the backburner for the time being," said Joshua Mahony, senior market analyst at online trader IG.

"For UK stocks, we are seeing a clear distinction between those less funded small cap firms compared with the FTSE 350 big hitters. The sharp declines seen on the AIM market signals a heightened risk of a UK-wide Wuhan-style coronavirus episode which could see partial shut-downs hit small and underfunded firms," he suggested.

"The coronavirus crisis remains a huge concern for global markets, with cases  continuing to appear throughout the globe."

3.30pm: FTSE 100 pulls itself back above 7,000

Heading into the final hour of Wednesday’s session, the FTSE 100 had recovered all of its lost ground from earlier in the day and was flat at 7,018 shortly before 3.30pm.

Traders in London appear to have been boosted by a strong start from Wall Street, which saw all three main indices open in the green after a selloff earlier in the week amid fears of the coronavirus outbreak disrupting global growth.

Equities across multiple sectors have been hammered over fears linked to the pandemic, although the losses appear to be less severe than the selloffs earlier in the week.

Some of the hardest hit have been travel and leisure firms, with cruise operator Carnival PLC (LON:CCL) among the top five blue chip fallers as its shares dropped 2% to 2,586.

Another firm under the cosh is TUI AG (LON:TUI), which was down 2.2% at 714.4p in late afternoon.

Given the tour operator’s recent slump, AJ Bell investment director Russ Mould has said TUI could see itself in the firing line for the next FTSE 100 reshuffle this week if the stock fails to recover.

“Shares in TUI got a boost in 2019 from the failure of major rival Thomas Cook but the travel agent has been dogged by the delayed delivery of 737Max aircraft from Boeing, weaker customer bookings thanks to Brexit and now the Coronavirus scare”, Mould said.

2.40pm: US markets open higher

Wall Street began Wednesday’s session on the front foot as traders attempted to rebound from the bloodbath caused by the equity selloff earlier in the week.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.5% at 27,219 while the S&P 500 climbed 0.67% to 3,149 and the Nasdaq rose 0.86% to 9,042.

However, the positive start in New York doesn’t seem to have provided much of an immediate boost for the FTSE 100, which was down 20 points at 6,997 shortly before 2.40pm in London.

1.35pm: Wall Street expected to open a touch higher

US markets are expected to start slightly higher on Wednesday as traders in New York appear to be searching for any relief from the coronavirus-inspired selloff.

The disease appears to be entering new territories every day as world health authorities struggle to limit its spread, with Greece becoming the latest country to report a case of the virus.

Aside from the pandemic problems, shares in Walt Disney Co (NYSE:DIS) will be in focus following the surprise resignation of its long-serving chief executive Bob Iger overnight. He will be replaced by Bob Chapek, the chairman of Disney’s parks, experiences and products division.

Back in London, the FTSE 100 was down 23 points at 6,994.

11.45am: Global car sales predicted to slump amid coronavirus disruption

As lunchtime approached, the FTSE 100 was attempting to claw back losses from its earlier plunge but was still clocking up losses of around 31 points at 6,987 at 11.45am.

Fears of the coronavirus spreading have already infected sectors across the global economy, although travel firms have been bearing the brunt of recent selloffs as investors seem to be predicting a tide of profit warnings as travellers stay at home to avoid infection hotspots.

Cruise firm Carnival PLC (LON:CCL), the owner of the Diamond Princess vessel that is currently quarantined in Japan to prevent its passengers spreading the disease, saw its shares drop 1.1% to 2,609p in late-morning, while food and drink firm SSP PLC (LON:SSPG), which operates outlets in airports and railway stations, dropped 4.9% to 568p as it warned the virus had contributed to a 50% slump in sales in the Asia-Pacific region in February.

Automakers could also be in for a tough time as a report from rating agency Moody’s issued a report predicting that global auto sales will fall 2.5% in 2020, down from previous forecasts of a 0.9% drop, as demand and supply chains were disrupted.

10.45am: Rio Tinto warns coronavirus could disrupt operations

Into mid-morning the FTSE 100 had recovered some of its earlier losses but was still down around 43 points at 6,974 just after 10.40am.

It seems that the coronavirus outbreak is affecting almost every global-facing sector on the exchange, with blue-chip miner Rio Tinto plc (LON:RIO) warning its results that the virus could “create significant uncertainty” for its business in the near term.

“We are closely monitoring the impact of the Covid-19 virus and are prepared for some short-term impacts, such as supply-chain issues”, said Rio chief executive J-S Jacques. Shares in the company were up 0.6% at 3,937.5p at around 10.40am.

The fallout isn’t limited to equities either, with prices of WTI crude oil falling to a one-year low of around US$49.40 a barrel amid concerns the outbreak will reduce global demand for the black stuff.

Helal Miah, investment research analyst at The Share Centre, said that the current selloff was different to similar ones that have occurred previously as while those in the past were sparked by “global growth worries”, it was currently unknown as to how much the virus will spread.

“Investors whose portfolios are geared to global growth do need to be concerned, while they have suffered losses already there is the potential for further losses as seen by the FTSE’s further slide this morning. When this selling pressure will stop is hard to say especially as it seems that it’s only the start of the virus taking hold here in Europe”, the analyst said.

9.45am: Travel stocks hammered on coronavirus fears

Travel stocks are once again taking a hammering on Wednesday morning as the growing fears over coronavirus give rise to concerns that holidaymakers will choose to stay home and avoid traditional holiday hotspots such as Italy and Spain, both of which have now detected the virus in their territory.

Shortly after 9.30am, shares in British Airways owner International Consolidated Airlines Group SA (LON:IAG) had descended 2.1% to 541.5p, while package holiday firm TUI AG (LON:TUI) was down 5.1% at 693p.

Things were similarly grim for the budget airlines, with Ryanair Holdings plc (LON:RYA) down 5.1% at €12.3, easyJet PLC (LON:EZJ) falling 4.4% to 1,159.5p, Wizz Air Holdings PLC (LON:WIZZ) sinking 2.9% to 3,675p and Jet2 owner Dart Group PLC (LON:DTG) slumping 7.3% to 1,338p.

Travel firms across the Channel are also attempting to implement measures to contain the outbreak, with German carrier Lufthansa announcing that it will be conducting a hiring freeze and offering unpaid leave to its current staff in an effort lower costs and reduce the impact of the outbreak on its bottom line.

The airline has already cancelled all flights to and from mainland China until the end of its winter flight schedule on 28 March, although it said it was not yet possible to estimate the expected impact of the current developments on earnings” ahead of its annual results, which are due on 19 March.

The FTSE 100, meanwhile, had continued its descent and had shed 68 points to 6,950.

8.35am: Running scared

The FTSE 100 opened firmly in the red on Wednesday as the threat of a global coronavirus pandemic grew, investors with worried by reported cases in Austria, Croatia and Switzerland, close to the hotspots for the outbreak in northern Italy.

UK health officials, meanwhile, have painted a bleak worst-case picture, which could see up to 500,000 deaths.

WATCH: Morning Report: Growing threat of coronavirus sees FTSE 100 open firmly in the red

The index of UK blue-chips opened 42 points lower at 6,975.23

The Dow Jones lost almost 900 points on Tuesday, and Asia’s main markets continued their downward trajectory.

“At present there is no sign of a stabilisation in progress - trying to guess when the bottom is in will be dangerous,” said Neil Wilson analyst at Markets.com.

“The CDC [Center for Disease Control] is briefing that a significant outbreak in the US is a matter of when, not if. Europe already looks to be ready to go, with five new countries reporting their first cases."

“As I've been saying for these last few weeks, any outbreak of cases in Europe and/or the US would be the cue for the big selloff. It's only when it's close to home that it really sinks in,” he added.

Budget airline easyJet (LON:EZJ) was the Footsie’s biggest casualty with a 4% fall, compounding Monday’s rout amid fears a major European outbreak will put the kibosh on travel.

Housebuilder Taylor Wimpey (LON:TW.) had a little wobble after results, falling 1.9%.

Proactive news headlines:

Symphony Environmental Technologies PLC (LON:SYM) has received approval for its d2p antimicrobial food packaging from the US Food and Drug Administration (FDA). The environmentally friendly plastics specialist said the approval provided “a new and immediate commercial opportunity in the western world’s largest market” and that it expected to see “considerable interest” for the use of d2p in the baking industry, where it already derives significant revenues from sales of its biodegradable d2w plastic products.     

Integumen PLC (LON:SKIN) has unveiled the launch of a new green-tech real-time system that monitors water for bacteria contamination using artificial intelligence. The partners in ecowaterOS are Integumen’s Rinocloud AI, Acumen Software, the Nimbus Research Centre, the Cork Institute of Technology, Cellulac, Modern Water and, the tcBB Resource Centre.

Plexus Holdings Plc (LON:POS) told investors that its Russian licensing partner, Gusar, has made an order for more POS-GRIP exploration jack-up drilling wellhead equipment. It follows encouraging discussions between Gusar and its customers, built on momentum from the successful Russian installation of a first POS-GRIP system for Gazprom. Pricing for the equipment was at market rates and payment will be in cash, Plexus said.

Eco Atlantic Oil & Gas Ltd (LON:ECO) (CVE:EOG) told investors it is fully funded and it is pushing for its joint venture partners to commit to at least one new cretaceous exploration well as soon as practically possible. The cretaceous play is the most prominent in the region, in terms of successes, with Exxon’s nearby multi-billion barrel Stabroek discoveries along with Repsol’s separate Carapa discovery which was recently made on a neighbouring licence block.

Equals Group PLC (LON:EQS), the e-banking and international payments group, has announced the appointment of the former chief executive of challenger bank First Direct, Alan Hughes as a non-executive director with effect from 1 March. In a statement, the AIM-listed group noted that Hughes is a highly experienced director with a speciality in fast-growth banks and fintech businesses, and, until 2004, he was an executive board member and general manager at HSBC Bank.

Inspiration Healthcare Group PLC (LON:IHC), the global medical technology company, has announced that its chief financial officer, Mike Briant will be retiring from the board at the end of June 2020. The AIM-listed firm said it is intended that Jonathan Ballard, currently Inspiration's financial controller, will become the group's chief financial officer with effect from 1 July 2020.

Chaarat Gold Limited (LON:CGH) has announced three senior management hires. Vladimir Shvetsov is taking up the role of vice president for geology and exploration, replacing Dusty Nicol, who will continue to work closely with the company. Vyacheslav Pilipenko, meanwhile, has been appointed vice president for government relations and security, and it brought on board Frances Robinson in January as company secretary.

Avation PLC (LON:AVAP), the commercial passenger aircraft leasing company said it will host a conference call on 28 February 2020 at 1pm GMT (UK), 8am EST (USA) to discuss the company's first half-year results for the 2020 financial year. The results will be published at 7am GMT on 28 February.

Bluejay Mining PLC (LON:JAY), the AIM-listed company with exploration projects in Greenland and Finland, announced that it will be presenting at the PDAC International Convention, Trade Show & Investors Exchange to be held from 1-4 March 2020 at the Metro Convention Centre, Toronto, Canada. The group said it will provide an overview of its three key projects - the Dundas Ilmenite Project, the Disko-Nuussuaq Nickel-Copper-Platinum Project and the Kangerluarsuk Zinc-Lead-Silver Project - at the PDAC Greenland Day, which is hosted by the Government of Greenland.  The company will be represented at PDAC by executive director and COO, Dr Bo Møller Stensgaard; Geology Manager, Eric Sondergaard; and Greenland Exploration Manager, Joshua Hughes Following the event, Bluejay's presentation will be made available on the company's website.

6.45am: Footsie set for back foot start 

The FTSE 100 is expected to open on the back foot on Wednesday as fears continue to mount over the spread of the coronavirus.

Spread-better IG expects the FTSE 100 to open around 40 points lower after ending Tuesday’s session down 139 points at 7,018.

Investors appear to be beginning to panic that despite a slowdown in cases in China, new infections across countries such as Italy and Spain mean the outbreak may not be going away any time soon.

“Now that politicians have started to close borders, impose restrictions on movement, as well as impose quarantines, investors appear to be preparing the ground for the inevitable profit and revenue downgrades that are likely to appear in the coming weeks and months”, said Michael Hewson at CMC Markets.

“What we appear to be seeing is the realisation that global economic growth could well come to a halt as the combined effects of a flu virus and belated attempts to stem the spread of it across the globe, raise the prospect of an economic sneeze, as consumers stop spending, and supply chains seize up, due to workers and consumers staying at home”, he added.

Fears have been increased by the Centre for Disease Control and Prevention (CDC), which said a coronavirus pandemic was now likely after reporting 53 cases in the US.

Investor panic caused US markets to suffer heavy losses overnight, with the Dow Jones Industrials Average suffering its worst two-day points drop in two years as it ended Tuesday’s session down 3.15% at 27,081. Meanwhile, the S&P 500 slumped 3% to 3,128 and the Nasdaq tumbled 2.77% to 8,965.

Asian markets followed the US lead on Wednesday morning, with the Japanese Nikkei 225 down 0.79% while Hong Kong’s Hang Seng sank 0.81%.

One beneficiary of the rush into haven assets was gold, which saw prices hit a seven-year high overnight.

On the currency markets, the pound was down 0.09% at US$1.2987 against the dollar, dropping back to just below the US$1.30 level.

Significant announcements expected for Wednesday:

Finals: Rio Tinto plc (LON:RIO), Taylor Wimpey PLC (LON:TW.), Avast PLC (LON:AVST), Nichols PLC (LON:NICL), Restaurant Group PLC (LON:RTN), Serco Group PLC (LON:SRP), Unite Group PLC (LON:UTG), William Hill PLC (LON:WMH), Weir Group PLC (LON:WEIR), Metro Bank PLC (LON:MTRO)

Interims: Revolution Bars Group PLC (LON:RBG), Avingtrans PLC (LON:AVG), Town Centre Securities PLC (LON:TOWN)

Around the markets:

  • Sterling: US$1.2987, down 0.09%
  • Brent crude: US$54.38 a barrel, up 0.2%
  • Gold: US$1,643.38 an ounce, down 0.2%
  • Bitcoin: US$9,186, down 3.7%

City headlines:

Rishi Sunak is set to delay some of the UK government’s biggest decisions on tax, spending and borrowing as the chancellor faces significant economic headwinds to his Budget – Financial Times

HSBC is to close a further 27 branches this year because it “cannot ignore” the changes in the way people are doing their banking – Guardian

Expedia to cut 3,000 jobs in major restructuring to trim workforce by 12% following the departure of its chief executive and chief financial officer in December – FT

Disney has announced the surprise early replacement of its chief executive Bob Iger; he will be replaced by Bob Chapek, the head of Disney’s parks and travel business – Telegraph

Retail sales have edged up by less than expected in February, according to the CBI – Times

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