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FTSE 100 slumps 7.7% to below 6,000 as markets react to coronavirus crisis, oil price war

A total of 319 people have tested positive for coronavirus in the UK, the Department of Health has said.

Clarkson Group -
FTSE 100 saw £144 billion wiped off its value on the day
  • FTSE 100 plunges nearly 500 points
  • Coronavirus cases in the UK rise 46 to 319
  • London's oil titans tank

5.20pm: FTSE tanks: worst intraday loss since 2008

FTSE 100 index closed deeply in the mire on Black Monday as the oil price tanked and global markets were still running scared from the coronavirus.

Footsie shed over 496 points, or 7.7%, to take it below the 6,000 level - at 5,965.

It was the worst day for the UK benchmark since the meltdown of 2008 and saw £144 billion wiped off its value. The index has tanked nearly 20% in the last month (since February 10).

The mid-cap FTSE 250 also plunged over 1,199 points on the day, or 6.4%, to 17,547.

It was another 'day for the history books,' noted Chris Beauchamp, chief market analyst at online trader IG, as the Dow Jones Industrial Average plunged over 6%, or 1,600 points. Earlier the US benchmark had been down an eye-watering 9%.

"If the coronavirus wasn’t bad enough, the rift between Saudi Arabia and Russia in relation to the oil market has hammered investment sentiment too. The Saudi’s seem to be in a price war with the Russians, and the result is that oil prices have tanked," added David Madden, at CMC Markets.

Oil (US benchmark) slumped over 20% to US$32.89 a barrel. London’s big oil titans Royal Dutch Shell (LON:RDSB) and BP (LON:BP. fell 18% and 19% respectively and were Footsie's top laggards. There was just one gainer on Footsie, namely Polymetal International (LON:POLY), up 0.58%, after the gold price reached a new seven year high.

According to official numbers, 319 people in the UK have tested positive for the virus, up from 273 on Sunday and there have now been four deaths in the UK related to the illness.

The worldwide death toll from the Covid-19 strain is heading towards the 4,000 mark.

3.50pm: FTSE  down 7%

While Royal Dutch Shell (LON:RDSB) and BP PLC (LON:BP.) remain responsible for a large chunk of the Footsie's fall, neither is now the index's worst performing stock.

That unwanted accolade now falls to software outfit Aveva Group PLC (LON:AVV), which is leading the FTSE 100 462 points (7.1%) lower at 6,001 with a 20% fall to 3,420p.

Aveva may be a technology firm but a lot of its customers are in the oil sector, which explains why it is being hit so hard.

Today's slump in oil prices should be good news for heavy oil users such as Carnival PLC (LON:CCL) but the cruises operator is deep in the doghouse, sporting a 17% fall.

The company's liner, the Grand Princess, will be allowed to dock at the port of Oakland in California today. According to the US vice-president, Mike Pence, at least 19 passengers on board the ship plus two members have tested positive for the coronavirus.

 

A total of 319 people have tested positive for coronavirus in the UK, the Department of Health has said.

The figure represents an increase of 46 on yesterday's figure.

In Scotland, the number has risen from 18 yesterday to 23 today.

“There is an increasing inevitability that we will face a significant outbreak of coronavirus across the UK,” said Scotland's first minister, Nicola Sturgeon.

The FTSE 100 was down 468 points (7.2%) at 5,994.

2.45pm: Circuit breaker does its job in US

The circuit-breaker on the New York Stock Exchange seems to have done its job, as US stock prices are now recovering slightly.

After an hour of trading, the Dow Jones was down 1,412 points (5.4%) at 24,471 while the S&P 500, which earlier had fallen the maximum 7.0% allowed before a 15-minute trading halt is implemented (the so-called “circuit breaker), was down 166 points (5.6%) at 2,807.

The US benchmarks are faring better than the FTSE 100, which was down 406 points (6.3%) at 6,057, thanks in no small part to the hammering taken by BP and Royal Dutch Shell following the OPEC+ bust-up over the weekend.

On the futures market, Brent crude was trading at US$36.93 a barrel, down US$8.34 (18%) on the day.

“Saudi Arabia and Russia basically said ‘enough is enough’ to US shale. After crashing 10% on Friday, West Texas Intermediate crude is down around 20% today as energy markets begin to price in life without the OPEC + production cuts and the race for market share,” said Oanda's Edward Moya.

“Saudi Arabia’s pricing move over the weekend signalled they are going after market share and all signs suggest they will ramp up production quickly to over 10 million barrels a day in April and possibly another 2 million in the short-term,” Moya added.

1.45pm: S&P's 7% fall triggers circuit breaker

US benchmarks plummeted at the open with the S&P 500 falling the maximum allowed before trading was halted as per NYSE rules.

The S&P 500 was down 7.0% (208 points) at 2,764, thus tripping the so-called circuit breaker, where trading is suspended for a 15 minute period to enable market makers and brokers to catch their breath and plot their next move.

That next move is likely to be “sell”.

Meanwhile, the Dow Jones was off 1,885 points (7.3%) at 23,979 as US investors reacted to the same developments that have opened a trap door beneath other global stock markets: the oil price was and the continuing spread of the coronavirus.

“A fall in oil prices is often a boon for the consumer, cutting fuel costs, but Covid-19 has caused a decline in demand. This has caused wider concern around economic growth, and central banks have had to step up to show they will support liquidity. Fiscal levers will be important too and we look to Rishi Sunak’s Budget on Wednesday for support to the UK economy in the face of these headwinds,” said Robert Alster, the head of investment services at Close Brothers Asset Management.

“For investors, now more than ever, it’s vital to think long-term. Equity returns consistently outpace other assets in the long-run, and there is currently an opportunity to buy in the dip – those who manage to stay calm and pragmatic in the face of volatility are likely to reap the rewards in the future,” he advised.

In the UK, the FTSE 100 has no circuit breaker and remains in freefall, down 542 points (8.4%) at 5,920.

1.20pm: Down half a grand

Oil stocks may be taking a mullering today but they've yet to make it into the list of five worst Footsie performers since 21 February.

That's the date when coronavirus hysteria stopped being something largely happening on the other side of the world and started happening in Europe.

The five worst performers on the Footsie since then contains four travel-related stocks and one Russian steel maker.

Stock % change since 21 February
TUI AG (LON:TUI) -44%
Carnival PLC (LON:CCL) -42%
Evraz PLC (LON:EVR) -39%
EasyJet PLC (LON:EZJ) -36%
IAG (LON:IAG) -34%

Footsie stocks that have risen over the same period?

There are none but if you are looking for somewhere relatively safe to put your money and stuffing it under the mattress does not appeal, supermarkets have escaped relatively lightly; J Sainsbury PLC (LON:SBRY) is down just 1.6% since 21 February and Wm Morrison Supermarkets PLC (LON:MRW) is off 2.9%.

Academic materials publisher Pearson PLC (LON:PSON), which speculators could not wait to short when markets were sedate, has been a massive outperformer, shedding 4.5%.

Polymetal International PLC (LON:POLY) has also done relatively well (-5.5%), as has drugs giant, GlaxoSmithKline PLC (LON:GSK), down 6.1%.

Switching from a historical perspective to today's omni-rout, the worst seven performers in London are all energy stocks, which is little surprise given the price war that has broken out in OPEC+'s ranks.

Breaking the sequence was Tern PLC (LON:TERN), the investment company, which was off 24% at 5.9p after issuing shares at 6p a time to raise around £800,000.

Shortly before the start of trading in the US, the FTSE 100 was back below 6,000 at 5,958, down 504 points (7.8%).

12.25pm: Whatever happened to “revenge is a dish best served cold”?

Russia and Saudi Arabia don’t seem to have left much of an interval between last week’s OPEC+ meeting, which broke up on Thursday, and the onset of hostilities.

"When you’ve worked through the Asian crisis, the Russian/LTCM crisis, the 2000 equity bubble collapsing, the GFC, the European sovereign crisis, and several other smaller wobbles it takes a lot to stun you in financial markets; however, the weekend news-flow and overnight price action in oil - just at a time a beaten up market could have done without it - has done that and deserves its own place in the history books," said Jim Reid at Deutsche Bank.

In other words, never mind serving revenge as a cold dish, what about “the best time to kick a man is when he’s down”.

Artur Baluszynski, the head of research at Henderson Rowe, takes up that theme.

“With Russia walking out on OPEC, oil prices are very likely to visit the 2016 lows. Russia is willing to sacrifice its short-term economic well-being for longer term geopolitical goals of weakening Saudi Arabia and debt addicted US shale producers. Oil and mining heavy indices such as FTSE 100, already weakened by the coronavirus, are massively exposed,” he said.

“The good news is that cheap oil is usually a big positive for consumers but this takes time to feed through to the real economy and with both supply and demand being significantly affected by the coronavirus, the markets will continue to focus on the downside,” he speculated.

The FTSE 100 is at least keeping its head above 6,000 at 6,019, down 443 points (6.9%).

The next big test could be when US markets open; thanks to the clocks going forward stateside over the weekend, the market will open at 1.30pm GMT, and spread betting quotes currently suggest the Dow Jones will open its account at around 24,554 and the S&P at around 2,822 – down 1,310 points and down 150 points respectively.

11.40am: We're all dooooooomed

It’s hard to know whether to adopt the philosophy of Private Frazer or Lance Corporal Jones from Dads Army this morning.

Private Frazer would have us believe that we’re all dooooooomed, and today’s 423 point (6.5%) fall on the Footsie to 6,039 adds credence to that view.

Some might subscribe to the Lance Corporal Jones view that this is no time to panic, although the advice is somewhat undermined by the fact that the character delivered this advice while clearly panicking.

Perhaps the best advice to take comes from Sir Walter Scott’s Rob Roy: “it’s an ill wind blaws naebody gude” and look for some of the feel-good stories in today’s shake-out, two of which are related to the coronavirus – that thing that’s been shunted out of the headlines (temporarily) by the OPEC price war.

LiDCO Group PLC (LON:LID) shares climbed 9.5% to 5.75p as the coronavirus outbreak led to a surge in demand for its heart monitoring technology in China.

In a similar vein, Open Orphan PLC’s (LON:ORPH) climbed 3.4% to 6.15p after it joined the quest to find a cure for the coronavirus. Its hVIVO virology and vaccine operation has begun the world’s first human coronavirus challenge study.

10.45am: Rout resumes but Tesco and airlines get some love

The oil price war sparked by Saudi Arabia has at least removed the coronavirus from the headlines, although of course, the two things are linked.

London’s index of heavyweight shares is down 420 points (6.5%) at 6,042, with the heavily-weighted index constituents BP and Royal Dutch Shell leading the retreat.

On a day like today, where panic has a grip on investors, even news that a blue-chip company is to pay a special dividend equivalent to around one-fifth of its market capitalisation has failed to generate a positive response.

Tesco PLC (LON:TSCO), down 0.8% at 238.7p, is the company in question.

The supermarket chain has finalised the disposal of its Thailand and Malaysia business for US$10.3bn and plans to return £5bn to shareholders and pump £2.5bn into its pension fund.

Sector peers J Sainsbury PLC (LON:SBRY) and Wm Morrison Supermarkets PLC (LON:MRW) are also down but outperforming the market on reports of shoppers stockpiling essentials, such as toilet paper, soap (if they can find it), tinned foods and who knows what else.

When markets take a dive, grocery chain shares often outperform the market, and that has been the case this morning with Sainsbury’s down just 2.2% and Morrisons off 2.1%.

Drugs companies are also traditionally regarded as defensive sectors, which accounts for why GlaxoSmithKline PLC (LON:GSK) is down a mere 2.0%.

The oil price war has also provided the first bit of good news in weeks for airline stocks, which are huge consumers of oil.

British Airways owner International Consolidated Airlines PLC (LON:IAG) is down 2.3% and low-cost operator easyJet PLC (LON:EZJ) is 2.4% softer.

9.40am: Footsie 100 points off its low-point for the day

The recovery is on! Of course, the FTSE 100 is still down 6.8% on the day but it has battled back above 6,000.

London’s index of leading shares was down 372 points (5.8%) at 6,090, almost exactly 100 points above its low point for the day.

The two big integrated oil giants, Royal Dutch Shell (LON:RDSB) and BP PLC (LON:RDSB) are responsible for a large chunk of that fall; the former is down 18.9% and the latter 16.1%.

The price of Brent crude has fallen almost 20% this morning; on futures markets, a barrel is trading at US$36.34, down US$8.93.

BP and Shell can probably withstand that sort of price crash; a 61% fall for Premier Oil PLC (LON:PMO), a 47% fall for Tullow Oil PLC (LON:TLW) and a 20% fall for Cairn Energy PLC (LON:CNE) suggests that traders are not so sure mid-cap players can swallow it.

Meanwhile, oilfield support services providers are also getting it in the neck. Hunting PLC (LON:HTG) has lost a quarter of its value, John Wood Group PLC (LON:WG.) a fifth and Petrofac PLC (LON:PFC) about a sixth.

8.40am: It's like a jungle sometimes, I wonder how I keep from going under

As predicted, it was a bloodbath start to proceedings as Saudi Arabia effectively declared an oil war on Russia by pumping up output.

Collaterally damaged in all this – deliberately or otherwise – will be the world’s largest crude producer, the US.

One expert warned the Saudi-driven OPEC decision to open the spigots could wreck America’s shale oil industry leaving Houston like a ghost town.

As shares tanked by almost 9% and at a pace not seen since the financial crisis, over £150bn was wiped off the value of the UK’s top stocks already weakened by worries over the spread of the coronavirus.

Leading the Footsie below 6,000 points, were the oilers and the miners. The former group, made of BP (LON:BP), down 27% and Shell (LON:RDSA), off 20%, have been hit by the 30% slide in the value of a barrel of crude.

London’s diggers, led by Anglo American (LON:AAL), 20% lower, will be knocked by the recessionary impact of this double-whammy of events.

US-focused Ashtead (LON:AHT) was the index’s biggest casualty, reflecting the fact the world’s largest economy may be at an economic tipping point. Its shares tumbled 32%.

Investment group Schroders (LON:SDR), meanwhile, lost just under a third of its market worth as the value of the stocks it holds shrank significantly overnight.

“Equities have been caught in the blast from the oil bomb,” said Neil Wilson, analyst at Markets.com.

“There’s a risk of losses in oil positions needing to be covered by selling down elsewhere - we’re in a vicious circle.

“Equity markets are hideous today and these kinds of moves are to be afraid of as they can lead to aggressive tightening in credit that can spiral into real financial distress. We don’t know even know what kind of impact the coronavirus will have on the economy yet bond and equity markets are screaming recession.

“This is going to take a massive fiscal effort - slicing rates by 50 basis points ain’t going to cut it.”

8.15am: We're down 570 points 

The index of blue-chips shares tumbled 570 points at the open to 5,893.27  as a stand-off between Saudi Arabia and Russia added to the anxiety over coronavirus.

It meant that 8.8% was wiped from the value of the UK's leading shares.

Proactive news headlines

Faron Pharmaceuticals Oy (LON:FARN, First North:FARON) said the US regulator has accepted the protocol design for a trial of Traumakine, a treatment for acute respiratory distress syndrome (ARDS).

Open Orphan PLC’s (LON:ORPH) hVIVO virology and vaccine operation has begun the world’s first human coronavirus challenge study. hVIVO owns Europe's only quarantine clinic with an onsite virology lab where the challenge model will be developed and used.

Bahamas Petroleum Company PLC (LON:BP.) has agreed to extend the deadlines attached for its £10.25mln loan note offering, as the explorer continues to advance towards the start of drilling for the Perseverance-1 well.

Union Jack Oil PLC (LON:UJO) has agreed to acquire an additional 35% of the Keddington oil field, which currently yields around 28 barrels of oil per day.

Tower Resources PLC (LON:TRP) has raised £500,000 in a share placing to provide working capital as it awaits the completion of a farm-out agreement for its Thali block in Cameroon.

Diversified Gas & Oil PLC (LON:DGOC) chief executive Rusty Hutson has described 2019 as a significant year with multiple key milestones reached and exiting with production of around 94,800 barrels oil equivalent per day.

Bushveld Minerals Ltd (LON:BMN) has signed a joint venture agreement with redT energy PLC (LON:RED) to form a vanadium financing partnership to supply vanadium electrolyte for third party-owned vanadium redox flow batteries in projects developed by redT.

Greatland Gold PLC (LON:GGP) is to step up exploration at its Paterson licences in Western Australia after establishing Havieron as a significant gold-copper discovery.

An Oriole Resources PLC (LON:ORR) subsidiary has secured US$2.5mln in investment from American Minerals Exploration & Development Fund III.

Live Company Group PLC (LON:LVCG) has signed an agreement with publisher Frederick Warne & Co to produce a BRICKLIVE tour themed around characters from the Peter Rabbit book series by Beatrix Potter.

VR Education Holdings PLC (LON:VRE) is to virtually host the 2020 HTC Vive Ecosystem Conference via its ENGAGE platform.

AFC Energy PLC (LON:AFC) has appointed Tom Pollard, an experienced electric vehicle (EV) charge point executive in the UK, as its national EV sales manager.

6.22am: Bloodbath predicted

The FTSE 100 looks set for a bloodbath start to proceedings as a stand-off between Saudi Arabia and Russia added to the anxiety over coronavirus.

Brent crude tumbled 27% to US$32.88 a barrel as the former began to flood the market with cheap oil as tensions escalated beyond boiling point.

The oil price was trading at levels last seen in January 2016 as it registered its biggest one-day drop since the 1991 Gulf War.

The move to open the spigots by Saudi-led OPEC will not only hit Russia, but the US too, the world’s largest producer, where output has been buoyed by the renaissance of shale production.

“Lower oil prices could basically make Houston a ghost town…[they] open up the prospect of bankruptcy, non-performing loans and put a squeeze on a lot of short-term credit lines,” Stephen Innes, strategist at a company called AxiCorp was quoted by the Financial Times as saying.

The move prompted a stampede into haven investments, which in turn forced down the yield from the 10-year Treasury 0.25 percentage points to a record low of a smidge under 0.5%, while the return on 30-year American government debt went below 1%.

Gold initially spiked above US$1,700 an ounce but edged down to US$1,663.

Here in the UK, the death toll from coronavirus rose to three on Sunday as the outbreak claimed a 60-year-old victim. There are now 278 cases.

Worrying is the spread of Covid-19 in Italy, which is edging close to lockdown.

In a market dominated by coronavirus and an oil war, Wednesday’s Budget looks likely to become something of a side-show.

Eyes will be on what recently installed Chancellor of the Exchequer Rishi Sunak will do to mitigate the economic impact of lower growth as a result of the global spread of the deadly illness.

Undoubtedly there will also be a focus on fulfilling the Conservative election promises to ‘level up’ Britain’s deprived northern regions with infrastructure spending, as well as supporting businesses that could find themselves at the sharp end of the coronavirus pandemic.

Monday’s main scheduled news

Finals: Clarkson PLC (LON:CKN), Foresight Solar Fund Ltd (LON:FSFL), Network International Holdings PLC (LON:NETW), Phoenix Group Holdings PLC (LON:PHNX)

Interims: Abcam PLC (LON:ABC)

Business headlines 

Financial Times

  • Citi confirms it will cut ties with two-thirds of FX systems
  • UK government plots audit laws in ‘Kingman 2’
  • Lagarde faces coronavirus challenge at ECB policy meeting

Times

  • Business rates are killing towns, says Co-op chief
  • Excise duty has us over a barrel, says whisky industry

Telegraph

  • Truckers face paperwork mountain after Britain opts against fast-track security checks agreement with EU
  • Ferrexpo's Steve Lucas to be announced as Averda chairman
  • 'Egotistical' car sector must change, says the former Bond car designer now taking on Tesla
  • JCB heir and Wrightbus owner Jo Bamford: ‘We can sell our hydrogen bus around the world’

Guardian

  • Perfect storm of bad weather and business rates fuels retail crisis

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