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FTSE 100 closes down 4% after more coronavirus carnage

Britain's blue-chip benchmark closed down 215 points, or 4%, at 5,151

Man in a mask
Footsie tanked again on Monday, along with other global indices as measures to contain coronavirus are stepped up
  • FTSE 100 index closes down 215 points
  • US indices in the red
  • William Hill suspends dividend payments

5.25pm: FTSE closes sharply lower

FTSE 100 index closed sharply in the red on Monday but still above the 5,000 mark as the coronavirus pandemic continues to crush market sentiment.

Britain's blue-chip benchmark closed down 215 points, or 4%, at 5,151, after yet another day of carnage in stocks.

The more domestically focused FTSE 250 index fared even worse, tanking over 7%, or 1,212 points to 14,349.

It comes as efforts from central bankers in the US, the Eurozone, the UK, Canada and Japan appear to have had little effect on markets.

"The aggressive rate cut and stimulus package form the Fed last night acted as a warning signal to the markets. A large rate cut gives off the impression they – the Fed, are nervous, and traders have picked up on that," noted David Madden, analyst at CMC Markets.

Madden added that the latest data from China showed that industrial production and retail sales had tumbled by 13.5% and 20.5% respectively.

He suggested dealers were  "terrified that the economies of Europe will see similar outcomes in the months ahead".

On Wall Street, the Dow Jones Industrial Average tanked over 2,000 points, nearly 9% to 21,161. US benchmark crude (West Texas Intermediate) fell 8.3% on the day to just US$29.08 a barrel.

Top laggard on Footsie was the pounded International Consolidated Airlines (LON:IAG), which plummeted an eye-watering 27% to 255.70p as it, along with other airlines are now planning to ground nearly all of their aircraft due to the reduction in demand because of the pandemic.

UK Prime Minister Boris Johnson earlier outlined measures for social distancing to try and tame the speed of the outbreak, which includes 'unnecessary' social contact.

"Without drastic action, cases could double very five or six days," he told a press conference following a COBRA meeting.

4.00pm: Bit of a sticky wicket for markets

The afternoon rally is running out of steam but barring the sort of collapse only the England batting line-up could achieve, it looks like the FTSE 100 will finish the day above 5,000.

At 4.00pm, the leading shares index was down 195 points (3.6%) at 5,171.

“Though the Dow Jones opened sharply lower, in a rare sight the European indices didn’t double down on their own losses, instead cutting the morning session’s slump in half,” reported Connor Campbell at Spreadex.

“The Dow quickly shed 6% once the bell rang on Wall Street, taking the same comfort from the Fed rate cut/quantitative easing programme as its peers across the pond – i.e. none at all. This 1400 point plunge left the US index at 21700, above the sub-202350 lows struck briefly after the open.

“Finding a smidge more confidence that was seen at that start of the day, the FTSE managed to claw its way back to 5150 – no small feat given that at one point it was trading under 4850 for the first time in 8 and a half years,” he added.

Despite the limited effect the Federal Reserve’s action seems to have had – except perhaps in creating more panic – Quentin Fitzsimmons, a fixed income portfolio manager at T. Rowe Price has called for the Bank of England to do something similar.

“It is time for the Bank of England to join the zero-bound club and cut interest rates to zero,” Fitzsimmons suggested, advocating a move that would in all probability give an immediate boost to fixed-income portfolio values.

“We expect the Bank of England to also start a new quantitative easing [QE] programme, in the region of £50-80bn. Anything less would deeply disappoint markets.

“Corporate bonds will need to be included in the next QE programme. In parallel, banks need to be encouraged to continue lending to small and medium companies. The last thing we need is for banks to be constrained by red tape and capital constraints.

“While rate cuts are an important step, a lot will depend on the successful implementation of the monetary transmission mechanism towards SMEs,” he concluded.
 

3.30pm: William Hill suspends dividend

While the FTSE 100 is getting clobbered, the mid-cap FTSE 250 is taking an even bigger shellacking.

The index of blue-chip stocks is down 209 points (3.9%) at 5,157, having enjoyed a decent rally since just before 2pm, the FTSE 250 is down 1,225 points (8.0%) at 14,324, led by pubs and brewing group Marston’s PLC (LON:MARS).

The company behind Hobgoblin beers and Pedigree ale shed 48% at 27.16p as traders speculate over how hard trading has been hit by the coronavirus.

Meanwhile, bookie William Hill PLC (LON:WMH) has suspended its dividend after counting the cost of the spread of the coronavirus, which has led to the cancellation of a number of sporting events and a concomitant loss of betting revenues for the company.

The shares were down by a third at 58.52p.

2.10pm: Carnival draws down about US$3bn 

US stocks opened lower, quickly triggering the circuit breaker that halts trading for 15 minutes. When trading resumed, so did the screaming …

The Dow Jones was down 2,289 points (9.9%) at 20,896 and the S&P 500 was down 253 points (9.3%) at 2,458.

In London, the Footsie has at least opted not to revisit its low point of the day (4,899), which it hit in the first hour of trading. With package tour operator TUI AG (LON:TUI) leading the retreat, the index is down 369 points (7%) at 4,989.

Asset management giant M&G PLC (LON:MNG) is rubbing shoulders with travel-related stocks in the Footsie basement as stock prices around the world plunge; the stock is down 23% at 112p.

Sportswear retailer JD Sports PLC (LON:JD.) also occupies an unwelcome place in the Footsie’s bottom five with a 22% fall at 397.9p as concerns grow that self-isolation moves will add another plank in the coffin of retailers.

Carnival PLC (LON:CCL), the cruise ships operator, is down 9.0% at 1,057p but off the bottom after it revealed it had drawn down roughly US$3bn of borrowings to tide it over the next six months.

1.20pm: New York manufacturing activity plummets

Manufacturing activity in New York State plunged in March, according to the Empire State Manufacturing Index.

The index crashed to a reading of -21.5, which is its lowest level since March 2009 and a 34,4 point swing from February’s +12.9 reading. The monthly fall was the largest since the survey was initiated back in 2001.

The consensus forecast among economists was for a reading of +3.0.

“Manufacturing is back in recession,” declared Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“This is the first piece of US manufacturing data conducted since the Covid-19 crisis began. The survey forms are sent out on the first working day of the month, by which point stocks had already fallen by more than 14% from their peak. The consensus, therefore, always looked absurdly optimistic. The headline drop is reflected in sharp falls in orders and shipments; the employment index dipped by a more modest 8.1 points, but it will fall further over the next couple of months,” predicted Shepherdson.

“The Empire State index has substantially over-predicted the national ISM [manufacturing index] since the trade war intensified last spring, because manufacturers in NY state are less reliant on China trade than firms on the west coast but the virus hit is so broad and deep that lower sensitivity to China is no protection now,” Shepherdson warned.

“We hope the Empire State and ISM numbers will now move back into line, because that implies the latter will dip only to 46 or so in March but if the recent gap between them persists, the ISM will plummet to just 40 or so, meltdown territory - the post-2008 crash low was 34.5. - and there’s no guarantee that will be the bottom,” he cautioned.

US futures markets are still predicting a bloodbath for US stocks when trading starts shortly. The Dow is expected to open at around 21,982 and the S&P 500 at 2,570.

In London, the FTSE 100 is back below 5,000 and heading south; it is down 410 points (7.6%) at 4,956.

12.30pm: Panic on the streets of London; panic on the streets of Birmingham

Despite the weekend’s emergency action by the US central bank, US benchmarks are set to plummet when trading starts at 1.30pm.

The Dow Jones, which rose 1,985 points on Friday to close at 23,186, is expected to open at 21,983, down 1,203 points.

The S&P 500, which soared 230 points to 2,711 on Friday, is tipped to open around 141 points lower at 2,570.

Berenberg Capital Markets said the coronavirus is crippling the US economy but the Federal Reserve is responding to the situation very aggressively.

“In fact, to date, it has been more aggressive than it was during the financial crisis of 2008-2009. These reflect the Fed’s concerns that the health crisis has shown signs of spilling over into a financial crisis and is certain to clobber economic activity,” the finance house said.

In London, the FTSE 100 has started to drift lower again and has subsided below the 5,000 level; the index is down 391 points (7.3%) at 4,975.

A number of Footsie companies have released statements today addressing the problems raised by the coronavirus pandemic; the statements from airlines easyJet and International Consolidated Airlines and DIY retailer Kingfisher plc had the most dramatic effects on the share prices, with falls of around 20% but Primark-owner Associated British Foods PLC (LON:ABF) did not get off Scott-free either; its shares tumbled 12% to 1,611.5p after it warned the lockdown across many countries in Europe will have a material impact on second-half numbers.

11.00am: Handful of blue-chips defy the trend

The Footsie is still licking its wounds and even contains a small handful of stocks that are sporting gains.

London’s index of blue-chip stocks was down 321 points (6.0%) at 5,044, with the losses offset slightly by gains for Imperial Brands PLC, Evraz PLC, J Sainsbury PLC and Reckitt Benckiser PLC.

IMPS (a cigarettes maker), Sainsbury’s (a grocer) and Reckitt (a maker of consumer goods) have long been regarded as decent defensive plays but Evraz, a maker of steel that it heavily reliant on Chinese industrial activity, is a bit of a surprise, trading 3.2% higher at 236p after the release of some Chinese macroeconomic data this morning.

China's industrial production was 13.5% lower year-on-year in the first two months of 2020, well below analysts’ forecasts for growth of 1.5%.

“The first set of official Chinese data came out post the Lunar New Year holidays clearly indicates a major dent to 1Q growth as officials locked down the country to prevent the spread of the coronavirus,” said Ben Luk, the senior multi-asset strategist at State Street Global Markets.

“Retail sales, fixed-asset investment and industrial production dropped by double digits in the first two months and came in much weaker than consensus estimates; however, this wasn’t a big surprise to markets as the domestic equity market, CNY and CNH were all relatively unchanged post the data release. Given the plunge in the manufacturing and services PMI earlier this month, this has already served as a preview on what to expect in these Chinese data,” Luk said.

“With supply-side disruption showing signs of enhancement, Chinese officials will need to turn their attention to revive domestic consumption. With global central banks moving towards a coordinated response and pushing rates back to levels only seen in the global financial crisis, we believe the People’s Bank of China (PBoC) will also follow suit with their version of monetary stimulus,” Luk added.

DIY retailer Kingfisher plc’s future in the FTSE 100 must be in doubt as it lost another fifth of its value this morning at 109.5p after all of its stores in France and Spain closed due to the coronavirus lockdowns in those countries.

10.00am: Bringing a lemon to a knife fight

Central banks are pulling out all the stops but (to switch metaphors) they appear to be spitting into a strong wind at the moment.

The FTSE 100 was down 316 points (5.9%) at 5,049, which at least represents a return to a level above 5,000 after the index plunged as low as 4,899 earlier this morning.

“On Sunday evening, the Federal Reserve made another emergency rate cut. This time slashing rates by 100 basis points bringing interest rates to 0-25%. The Federal Reserve also pledged to restart QE [quantitative easing], purchasing $700 billion in treasuries. The Fed also cut reserve requirements for banks to 0%,” reported Fiona Cincotta at GAINCapital.

“These moves will go some way to easing potential blockages in the system; however, the markets are still plunging this morning. This is because the market does not consider that the moves by the Fed and other central banks across the globe will sufficiently compensate for the economic hit that is coming from the coronavirus outbreak.

“More countries are closing their borders, more people are in lockdown or isolation or quarantine and businesses are grinding to a halt. The supply shock demand shock will be unprecedented, and airlines are already warning that they may not survive this crisis.

“Policymakers now need to step in to pick up and show that they are able to not only prop up the global economy but also stop the pandemic. G7 and G20 policy responses will now be in focus,” she predicted.

Travel firms remain deep in the red as doubts grow about their very survival while Melrose Industries PLC (LON:MRO), which owns aerospace and automotive engineer GKN, is evidently deemed to be in the same boat as the airline companies and is off 16% at 117.85p.

Bookmaker Flutter Entertainment PLC (LON:FLTR), the company behind Paddy Power and Betfair, slumped 16% to 5,412p after it conceded that the decisions to postpone or cancel high attendance sports events will obviously have a material impact on the revenue and earnings of the group which, in 2019, generated roughly 78% of its revenues through bets placed on global sporting events.

8.50am: We're all doomed (to have no pensions!)

The FTSE 100 dropped into the 4,000s on Monday as the panic seen in Asia overnight spread to London with the market now at levels last seen in the aftermath of the financial crisis more than a decade ago.

The index of UK blue-chips dived 400 points to 4,966.43 in early trade

The US Federal Reserve's move to cut interest rates to near-zero appears to have rattled rather than re-assured investors.  China's economic woes, meanwhile, were laid bare in a deluge of depressing official updates.

WATCH: Morning Report: FTSE 100 slumps again as British Airways and Easyjet ground fleets

Speaking about the Fed’s emergency rate cut, Jasper Lawler of London Capital Group said: “For the here and now, low interest rates just don’t help the demand shock facing the global economy.

“The multi-week, country-wide lockdowns taking place from the largest European economies like France and Spain to some of the smallest like Cyprus is going to take a heavy toll. Company revenues will turn sharply lower, as will commodity and foreign currency demand. The coordination among central banks is what markets are looking for from national governments.

“Markets were supported when the United States and Germany announced separate economic stimulus packages to fight the coronavirus. But before the Senate has even voted on the US bill, there is an admission that it’s not enough.”

On the market, travel firms TUI (LON:TUI), easyJet (LON:EZJ) and British Airways owner IAG (LON:IAG) have each seen between 27% and 30% wiped from their valuations. On the FTSE 250, struggling luxury car maker Aston Martin Lagonda (LON:AML) saw 41% wiped from its value.

Proactive news headlines:

Bidstack Group PLC (LON:BIDS) has inked an exclusive deal with video game developer Codemasters Group Holdings PLC (LON:CDM) to deliver in-game advertising for an upcoming 2020 title. The AIM-listed firm said that through the integration of its SDK product, brands and advertisers will be able to deliver contextually relevant ads in real-time to natural spaces within the game.

Westminster Group PLC (LON:WSG) said the supply of fever screening and associated equipment will represent a material element of its business this year. So far this year it has dealt with more than 500 enquiries from all over the world for fever detection and associated equipment, resulting in sales of roughly US$720,000; last year, it had no enquiries about its fever detection capabilities.

Ceres Power Holdings PLC (LON:CWR) expects full-year revenue growth to roughly match the 33% year-on-year increase achieved in the first half of its financial year. The fuel cell and electrochemical technology company that has the backing of Bosch, the German engineering and technology giant, saw total revenue and other operating income rise to £11.04mln in the six months to the end of December 2019, up from £8.27mln in the same period of 2018.

EQTEC PLC (LON:EQT) has signed a collaboration framework agreement with the German engineering, procurement and construction company, ewerGy. The five-year agreement covers the key terms of the proposed cooperation for the development of a portfolio of projects in Greece and the Balkan region. The parties have identified 11 potential projects in the pipeline; two are under development, with the remaining projects under due diligence.

Open Orphan PLC  (LON:ORPH) has noted that the results of a successful phase IIb trial of a potential flu vaccine being developed by a joint venture have been written up in a peer-reviewed article carried by a scientific journal. The data from FLU-v 004 challenge study underlined its ability to reduce mild-to-moderate symptoms of the illness. FLU-v has been developed by Imutex, 49%-owned by Open Orphan unit hVIVO, as the first 'universal', broad-spectrum influenza vaccine.

Jersey Oil & Gas PLC (LON:JOG) will lead a technical and commercial evaluation of Greater Buchan Area (GBA) of the North Sea, the oil field developer said on Monday. In a statement, the AIM-listed firm said it will assess whether a collaboration between the companies holding licences in the vicinity would result in a decrease in cost and an increase in value.

Quadrise Fuels International PLC (LON:QFI) said its MSAR pilot trial has been delayed after the client began restricting site access for external contractors as a precaution due to the coronavirus outbreak. The AIM-listed company said no revised trial schedule has yet been indicated and further announcements in relation to the situation in Morocco will be made “in due course”.

G3 Exploration Ltd (LON:G3E) said restructuring at the group reached a new phase, after joint provisional liquidators filed a second report on 13 March. The liquidators have been tasked to preserve and protect G3’s assets and identify any opportunities which may exist to restructure or refinance the company. "I am happy to report no employee has been infected by the coronavirus to date and we expect to gradually assume increased work duties by month-end,” chairman Randeep Grewal also revealed in a corporate update.

Vast Resources PLC (LON:VAST) has spent the weekend responding to the declaration of a state of emergency in Romania, where it operates the Baita Plai polymetallic mine. The company said it is putting in place all the necessary precautions to adhere to the government guidelines whilst ensuring it maintains the implementation programme to bring Baita Plai into production with minimal disruption in order to meet the timeframe stated in the previous announcement made on 11 March 2020.

Gfinity PLC (LON:GFIN) has conducted a strategic review into its operations and updated on its performance amid the ongoing coronavirus outbreak. The group added that challenging market conditions had been exacerbated by the “unprecedented impact” of the coronavirus, with two major events that the company had designed for clients, due to take place in July, having now been suspended as a result of the outbreak.

Sirius Minerals PLC (LON:SXX) saw trading in its shares suspended as at 7:30am on Monday 16 March 2020. The suspension comes ahead of the implementation of the acquisition of the company by Anglo American (LON:AAL), which is due on 17 March, and on which date the shares will be cancelled.

Futura Medical PLC (LON:FUM) said it will announce its audited results for the year ended 31 December 2019 on Wednesday, 1 April 2020. It added that James Barder, its chief executive officer, Angela Hildreth, finance director/chief operating officer, and Ken James, executive director and head of R&D, will host a webcast for analysts on the day of the results, which will be made available within the investor centre section of the company's website. In light of growing concerns regarding COVID-19, the company has decided to cancel its scheduled investor seminar, to be held on 26 March 2020.

6.25am: Panic stations 

The FTSE 100 looks set to open in the red again after the US Federal Reserve’s decision to cut interest rates to near-zero sent a wave of panic across Asia’s main markets.

Global recession would also seem to be a cast-iron certainty, with China revealing the early economic scars from the coronavirus. Industrial output hit its lowest level on record, retail sales fell by a fifth and urban unemployment was the worst on record, according to official figures.

The Hang Seng and Shanghai Composite were 3.7% and 2.3% lower respectively. China-reliant Australia saw the ASX200 tumble an almost unprecedented 9.7% in a bloody opening to the week.

“The bigger question now being asked is how much further do these declines have to go in the wake of the prospect that we’re on the cusp of coming to a juddering halt for the global economy,” said Michael Hewson, analyst at CMC Markets. “This, in turn, will plunge most of the global economy into a sharp recession."

"Barely a month ago, markets across the globe were trading at, or within record or multi-year highs, on misplaced optimism that this outbreak might be contained. Now here we are a month later, and it’s hard to envisage how we might get back anywhere close to these levels,” he added.

Before the Fed pre-empted the meeting, Wednesday’s update from America’s interest rate-setters was to be the big set-piece event.

Now we are looking at largely home-grown fodder.

On the corporate front, Morrison’s (LON:MRW) and Ocado (LON:OCDO) will tell us whether the grocers have been net beneficiaries of coronavirus panic buying, while Next’s (LON:NXT) online presence should act as a partial buffer to the dry up in High Street spending laster in the week.

Significant corporate news expected on Monday:

Finals: Diaceutics PLC (LON:DXRX)

Interims: Ceres Power Holdings (LON:CWR), Cap-XX Limited (LON:CPX), Volution Group PLC (LON:FAN)

Around the markets:

  • Pound worth US$1.2322
  • Gold trading at US$1,542.70 an ounce, up US$26
  • Brent crude changing hands for US$32.27 a barrel, down US$1.58

City headlines:

Financial Times

  • Chinese economy devastated by coronavirus outbreak
  • UK manufacturing exports at three-year low
  • EU rejects UK call for rapid agreement on financial services

Times

  • Banks act to save world economy from pandemic
  • Saudi Aramco cuts spending as oil price war rages on
  • £1bn loan scheme ‘could come too late’ for small businesses
  • Carluccio’s boss asks for rent holiday

Telegraph

  • Calls for government intervention to stop companies collapsing
  • LVMH orders perfume factories to start making hand sanitiser

Guardian

  • Manufacturers ask UK government to step in to limit coronavirus damage
  • LGIM to launch its first fossil fuel-free pension fund after pressure

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