• FTSE 100 closes 110 points lower
  • ITV is biggest Footsie laggard
  • FTSE 250 drops 419 points 

5.30pm FTSE 100 closes 110 points down

FTSE 100 index closed firmly in the red on Thursday amid a wide-spread sell-off, despite stimulus measures from central banks and governments this week.

Britain’s blue-chip benchmark closed down around 110 points, or 1.62%, at 6,705, while FTSE 250 dropped over 419 points to 19,323.

“On a week that has seen extraordinary action taken to stem the flow of pessimism, we are yet again heading towards the weekend surrounded by a sea of red,” said Joshua Mahony at online trader IG.

“What was largely a Chinese issue just a month ago, has turned into a global crisis that threatens to throw the world economy into recession,” he added on coronavirus.

On Wall Street, the Dow Jones tanked over 731 points and the S&P 500 shed around 82. Safe haven gold put on 1.24% to stand at US$1,663 a troy ounce.

In London, broadcaster ITV (LON:ITV) was Footsie’s biggest laggard, plunging 12% to 102.50p after the group’s full-year figures disappointed.

Total ITV advertising revenue slipped by 1.5%, while it is forecasting a slump in advertising revenues of at least 10% this April due to travel firms spend amid the coronavirus outbreak.

“The sector as a whole is suffering from changes in advertising patters as the likes of Google are snapping away at their market share,” David Madden, analyst at CMC Markets.

3.50pm: Capita crashes on day of heavy falls

It did not take long this morning for traders to work out London blue-chips would not be following Wall Street higher, and Footsie quickly flopped.

Wall Street has followed suit this afternoon, providing little incentive for UK investors to go bottom feeding.

With less than 45 minutes of trading left in the day, the FTSE 100 was down 126 points (1.9%) at 6,689, 15 points above its low point for the day.

“What started as a fairly calm session unravelled as the day went on, with investors once again gripped by panic about the cost of the coronavirus,” summarised Connor Campbell at Spreadex.

“How things pan out on Friday morning may well be dictated by just how bad things get by the US close. The Dow has really shown a willingness to MOVE in the last week and a half, posting insane triple or quadruple-digit shifts that come to inform the Asian and European sessions,” he added.

“Investors appear to be caught between the brief bursts of optimism that tend to greet the various stimulus announcements we’ve seen, and the growing awareness that the coronavirus isn’t going away any time soon, and that its economic impact will hurt sectors far beyond those– like travel firms and commodity stocks – that immediately come to mind,” he concluded.

On a day of heavy falls, controversial outsourcing group Capita PLC (LON:CPI) pretty much took the biscuit with a 42% fall to 73.82p as it warned efforts to restructure were proving tougher than expected.

READ Capita crumbles as transformation “requires more investment than expected”

https://www.proactiveinvestors.co.uk/companies/news/914372/capita-crumbles-as-transformation–requires-more-investment-than-expected–914372.html

3.00pm: Airlines take the brunt of new wave of pessimism

Airline stocks are getting it in the neck stateside after the International Air Transport Association (IATA) speculated on the cost to the airline industry of the coronavirus.

The virus outbreak is set to cost the airline revenue at least US$63bn of revenue, the industry body revealed, and that could rise to US$113bn if the virus spreads extensively to more countries.

The IATA has previously guesstimated that airlines would take a US$30bn hit from the virus.

Airline stocks were leading the retreat on US stock markets, driving the Dow Jones down 827 points (3.1%) at 26,264 and the S&P 500 90 points (2.9%) lower at 3,041.

In the UK, airline stocks have already taken a shellacking in recent works as the market woke up to the impact of the spread of the disease but the likes of easyJet PLC (LON:EZJ) and British Airways owner International Consolidated Airlines (LON:IAG) were marked down further today, as market makers reacted to the news that cash-strapped regional airline Flybe is throwing in the towel.

EasyJet shed 3.5% and IAG fell 4.9%.

The FTSE 100 was down 126 points (1.8%) at 6,689.

2.35pm: Goldman Sachs downbeat about UK economy

Goldman Sachs has warned that the coronavirus outbreak could push the UK close to recession.

The investment bank expects there to be zero growth in the UK’s gross domestic product (GDP) in the current quarter and expects the economy to contract 0.2% by in the second quarter.

“The UK is highly exposed to global activity (which we expect to contract in the first quarter), tourism exports are significant and the virus is spreading steadily within the UK,” the bank said in a note to research clients.

Elsewhere, Deutsche Bank (DB) has downgraded its 2020 growth outlook for the UK.

“We now see the UK economy growing by 0.5% in 2020 as a result of weaker global growth, supply-side disruptions, and a hit to demand due in part to subdued sentiment and self-containment measures,” said DB’s Sanjay Raja.

“To tackle the crisis, we expect coordinated policy action. On fiscal policy, we expect next week’s Spring Budget to highlight a series of emergency fiscal measures to support businesses and households as a result of disruptions caused by the coronavirus. Combined with the 2019 Spending Round and pledges made in the Conservative Party Manifesto, we expect overall borrowing (PSNB) to hit a five-decade high, rising to 3.1% of GDP,” Raja added.

The FTSE 100 was down 146 points (2.2%) at 6,669.
 

2.15pm: US first-time jobless claims in line with expectations

First-time jobless claims in the US last week eased to 216,000 from 219,000 the week before, pretty much in line with the consensus forecast.

“We expected a slightly lower reading, based on our analysis of the seasonals, but the weekly data are noisy and the trend is stable, close to 215K,” said Ian Shepherdson, the chief economist of Pantheon Macroeconomics.

“As a share of the workforce, jobless claims have never been lower; the weekly data extend back to 1948. The stability of the trend should mean that it is relatively easy to identify a change after the emergence of the coronavirus; we are braced for an up-shift in the next couple of months,” he added.

The Dow Jones industrial average, which before the release of the jobs data had been expected to open at around 26,474, is now expected to open even lower, at around 26,380, down 711 points.

The S&P 500 is tipped to open at 3,043, down 87 points.

London’s Footsie index has largely been travelling sideways for the last three hours or so and is down 126 points (1.9%) at 6,689.

1.25pm: US stocks to open sharply lower

US indices are set to give back more than half of yesterday’s gains when trading starts later this afternoon.

The Dow Jones average, which yesterday soared 1,173 points to close at 27,091 is expected to open today some 607 points lower at 26,474.

The broader-based S&P 500, which jumped 127 points yesterday, is seen opening its account at 3,055, down 75 points.

In the UK, the FTSE 100 is down 121 points (1.8%) at 6,694.

“Initial gains for equity markets have faded as investors once again begin to worry about the spread of the coronavirus outside China. The Western world is now following some of China’s playbook, closing schools and declaring a state of emergency for example, but there is a sense here that this is too little, too late,” said Chris Beauchamp, he chief market analyst at IG.

“Markets are bracing themselves for fresh jumps in infection rates, and we can see risk being heavily sold as this process gets underway. The rebound in stocks has run its course for now, with a retest of last week’s lows a real possibility,” he suggested.

12.20pm: Oil price stabilises as OPEC ministers meet in Vienna

London’s index of blue chip shares remains deep in a hole and US indices look set to join it.

The FTSE 100 was down 123 points (1.8%) at 6,694.

“US stocks are in for a soft open following yesterday’s huge rally after global travel restrictions grow. The disruption in travel and trade is intensifying and global equities will likely struggle to keep the fiscal and monetary stimulus rally going as sentiment continues to crumble,” said Edward Moya at Oanda.

“Traders will pay close attention to the US weekly jobless claims release this morning. The coronavirus economic impact could finally be hitting the US labour market. If the strongest part of the US economy starts to weaken, recession concerns will grow quickly,” Moya predicted.

Meanwhile, the OPEC meeting in Vienna is taking place against a background of plunging oil prices – although today has at least seen a stabilisation in oil prices on the futures markets.

“The coronavirus has now spread to 84 countries/regions around the world. The real impact on the global economy and the global oil market is huge. Brent crude closed down $0.73/bl to $51.13/bl yesterday (04 March) and got no help from the US $8bn emergency spending bill.

“IHS has reduced its oil demand for Q1 2020 by 4.5mln bbl/day, equal to a year-on-year decline of 3.8mln bbl/day, the worst decline ever (even worse than during the global financial crisis in 2009). If Russia does not step up now then what role does it really play in OPEC+? Probably, and hopefully, it is only playing hard to get as it tries to maximise its political gains,” said Bjarne Schieldrop, the chief commodities analyst at Nordic bank, SEB.

“More than anything Russia seems to be in the game of OPEC+ for the political gain it gets in the Middle East and the close relationship with Saudi Arabia specifically. So far, it has not cut production much at all while it has reaped significant political gains. As the virus-storm continues to gather pace and strength, the general take in the market now seems to be that unless OPEC+ decides to make some real chunky cuts this week then $30/bl is what the crude oil price will be.

“The main expectation is however that Russia will join in with additional cuts. A comical outcome would be if they do not reach any decision on cuts at all and communicate this on a video conference in order to avoid being infected by the virus. Our view is that OPEC+ will make necessary cuts in order to avoid a drop in the oil price down to $40/bl and $30/bl but not deep enough to drive it up from its current level of about $50/bl in the next few months,” the analyst said.

11.00am: Triple-digit fall for the Footsie

The Footsie is now nursing a triple-digit fall as the number of companies reporting profit warnings related to the coronavirus continues to rise.

London’s index of leading shares was down 121 points (1.8%) at 6,695, with just a handful – seven – of blue-chip stocks defying the trend.

Among them were car insurer Admiral Group PLC (LON:ADM), general insurer Aviva PLC (LON:AV.) and industrial conglomerate Melrose Industries PLC (LON:MRO), all of which updated the market this morning.

Admiral was up 10p at 2,191p despite co-founder David Stevens announcing his intention to step down as chief executive officer.

Stevens is going out on a high with the company boasting of a record profit before tax of £526.1mln for 2019, up from £479.3mln the year before.

Aviva inched up 0.1% to 350.3p

Melrose topped the Footsie leader-board with a 1.7% rise after an upbeat trading statement in which, notwithstanding the impact on its markets of the coronavirus, it expressed confidence in the future of GKN, the aerospace and automotive engineer it bought in 2018.

Meanwhile, Saga PLC (LON:SAGA), the insurance and travel company that targets the over 50s market, surprised few by warning that its cruise business would be hit by the coronavirus but predicted its insurance business would largely escape any fall-out.

The shares were down 7.4% following the trading update.

9.40am: Evraz and ITV the big fallers

The Footsie has spent most of the morning in retreat with the fall-out from the coronavirus continuing to have an impact on sentiment.

London’s index of leading shares was down 82 points (2.0%) at 6,734, with Russian steel maker Evraz PLC (LON:EVR), down 11.4%, leading the retreat, closely followed by terrestrial broadcaster, ITV PLC (LON:ITV), which was off 8.9% after revealing that ad revenues are being hit as companies cut back on marketing spend in the wake of the coronavirus outbreak.

“It is becoming a lot easier to understand why share prices have slumped this year as more corporates attempt to quantify the impact of the coronavirus on trading,” said Russ Mould, the investment director at AJ Bell.

“ITV is the latest business to suffer as a sharp drop in demand for flying has seen travel companies slash advertising activity. The media group warns that total advertising revenue will be down 10% in April,” he reported.

“Travel companies won’t be the only sector cutting their marketing activity. If more people are forced to work from home, either because of decisions made by their employers or their children’s schools are closed, then it is feasible to suggest a sharp drop in consumer spending in the UK,” Mould noted.

Talking of travel companies, Britain’s largest regional airline, FlyBe has ceased trading with immediate effect. 

“A domino effect now puts 1,400 jobs in the wider supply chain at immediate risk and threatens the future of vital regional airports,” warned Nadine Houghton, the national officer of the GMB union.

Meanwhile, Pantheon Macroeconomics’ invaluable “daily coronavirus update” reports that the total number of cases globally rose by 2,280 yesterday, which was down slightly on the previous day but still above the 2,200 over the previous five days.

China, South Korea, Italy and Iran accounted for 75.6% of new cases, which was much lower than the prior trend of nearly 90%. Other countries reported 552 cases yesterday, more than double the previous day’s 258, spread across a wide geographical range but concentrated in Europe.

The number of new cases in Italy rose 587, well above the 369 prior five-day average.

8.40am: Reality check

After closing almost 100 points to the good on Wednesday amid global stimulus hopes, the FTSE 100 opened to the reality Thursday that the coronavirus outbreak hasn’t gone away and is still a threat to global growth whatever central banks do.

The index of UK blue-chips fell 26 points to 6,789.40 in early deals

Never mind the 900-point leap of the Dow Jones after-hours, or Asia’s ascent today, the start in London was as dour as the weather over the Square Mile.

Ex-dividend factors were responsible for around 4 points of the index’s decline. The remainder reflected the continued skittishness around the Covid-19 pandemic, which, while seemingly having stabilised in China, is still on the rise in South Korea, Italy, and Iran.

And here in the UK, Wednesday saw the largest one-day jump in cases since the illness started to emerge.

Turning to the market, ITV (LON:ITV) shares were an early victim after the broadcaster said it had been hit by a downturn in travel and holiday advertising in the wake of the coronavirus outbreak. The FTSE 100-listed firm’s shares fell 5.5%.

Aviva (LON:AV), by contrast, advanced 2.7% after the insurer’s latest results passed muster with the City.

Proactive headlines:

Sirius Minerals PLC (LON:SXX) shareholders, those that have yet to exit in the market, will now endure the long goodbye – as the controversial UK mine firm confirmed the timeline to the completion of its acquisition by Anglo American Plc (LON:AAL). Yesterday it was confirmed that Tuesday’s shareholder meeting greenlighted Anglo’s £400mln takeover. Over 1,300 investors cast their vote, with 80.28% in favour to surpass the required 75% threshold for the deal to go ahead.

Faron Pharmaceuticals Oy (LON:FARN) (NASDAQFIRSTNORTH:FARON) said its MATINS phase I/II clinical trial has identified another partial response to its cancer drug, Clevegen. Remember, early-stage trials of this sort are usually only concerned with assessing safety, side-effects, and dosing. In Part I of the MATINS trial it was discovered the lung metastasis of a melanoma patient shrank by 44% after receiving the Faron drug.

Franchise Brands PLC (LON:FRAN) posted a 29% increase in adjusted underlying earnings (EBITDA) for 2019, driven by accelerating Metro Rod system sales. The multi-brands franchise business increased its adjusted EBITDA to £5.2mln from £4.0mln on the back of a 24%, while revenue rose to £44.0mln from £35.5mln the previous year. Profit before tax climbed to £3.28mln from £2.86mln the year before.

Zoetic International PLC has delivered an update to investors on the progress of its cannabidiol (CBD) business. The company said that a contract with a US national distributor for smokable products and chew pouches was in final form and would be signed once it concluded successful trials with its contract manufacturing partners.

Stobart Group Ltd (LON:STOB), which holds a 30% stake in Flybe owner Connect Airways, said the collapse of the regional airline will result in a non-cash balance sheet impact of £43.3mln as well as an additional £7mln investment made in 2020. Both will be written down to zero.

Mineral & Financial Investments Ltd (LON:MAFL) expects that its portfolio could benefit from the gold price rally, as it is overweight precious metals. The company noted also that it has taken a position in ProShares UltraPro Short ETF. “The position cost us some performance in Q2, but in February 2020 they have rallied from US$16 to US$23.76, as at the writing of this statement,” the company said, in its interim results.

Futura Medical PLC (LON:FUM) said it is hosting an investor seminar later this month at which it will share the latest internal analysis and literature on its breakthrough erectile dysfunction gel, MED3000. The update follows the company’s phase III clinical trial, called FM57, which revealed the treatment, which uses the company’s DermaSys technology, to be “highly effective” and safe.

MTI Wireless Edge Ltd (LON:MWE) announced that its wireless irrigation control solutions subsidiary, Mottech Water Solutions Ltd has signed a renewal service agreement valued at approximately US$0.9mln. The AIM-listed technology group, which is focused on comprehensive communication and radio frequency solutions across multiple sectors, said the renewal service agreement is with one of the five largest municipalities in Israel and one of Mottech’s largest service customers.

Eden Research plc (LON:EDEN), the AIM-quoted biopesticide products group, said its non-executive chairman, Lykele van der Broek has purchased a total of 571,000 ordinary shares in the company at an average price of 6.65p. Following the transaction, the group said, van der Broek’s interest in the company is 929,500 ordinary shares representing around 0.45% of the issued share capital.

Chaarat Gold Holdings Limited (LON:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia, has announced the appointment of finnCap as its joint corporate broker with immediate effect. The group said finnCap will work together with the company’s existing brokers Numis Securities and SP Angel Corporate Finance.

6.50am: Front foot start predicted

The FTSE 100 is set to start Thursday on the front foot following strength on US and Asian markets overnight as equity sentiments were buoyed by hopes for further central bank stimulus following the Federal Reserves surprise rate cut earlier this week.

CFD and spread betting firm IG Markets is calling the London index about 43 points higher, making the price 6,835 to 6,838 with just over an hour before the start of Thursday’s deals.

At the same time, it is set to be a busy day for announcements in London with ITV, Aviva, Admiral, and Domino’s all reporting.

More broadly attentions remain on coronavirus, its economic impacts, and, possible institutional responses.

“There was chatter the European Central Bank as well as the Bank of England would lower rates too, and that speculation spurred buying,” said David Madden, CMC Market analyst.

“The rallies in Europe weren’t huge as some traders were sceptical about the prospect of lower rates. In addition to that, the deepening health crisis in Italy will cause further disruption in the country as it was announced the government will close all schools and universities in a bid stop the spread of the health crisis.

“It is the third-largest economy in the eurozone, so traders will be monitoring the situation.”

Wall Street last night close strongly, with the Dow Jones rising 1,173 or 4.5% to 27,090. The S&P 500 similarly advanced 4.2% to finish at 3,130 and the Nasdaq added 3.85% to 9,018.

In Asia, Japan’s Nikkei gained 229 points or 1.09% to change hands at 21,329 and Hong Kong’s Hang Seng climbed just over 2% at 26,766. The Shanghai Composite, meanwhile, also added about 2% to 3,070.

Around the markets:

  • Pound: US$1.2886, up 0.11%
  • Gold: US$1,640, down 0.06%
  • Brent crude: US$51.95 per barrel, up 0.17%
  • Bitcoin: US$8,938, up 1.56%

Significant events expected on Thursday 5 March:

Finals: ITV PLC (LON:ITV), Intu Properties PLC (LON:INTU), Aviva PLC (LON:AV.), Admiral Group PLC (LON:ADM), Domino’s Pizza Group PLC (LON:DOM), GVC Holdings PLC (LON:GVC), Melrose Industries PLC (LON:MRO), Spire Healthcare Group PLC (LON:SPI), PageGroup PLC (LON:PAGE), Premier Oil PLC (LON:PMO), Franchise Brands PLC (LON:FRAN), Gresham House PLC (LON:GHE), Headlam Group PLC (LON:HEAD), Schroders PLC (LON:SDR), Spirent Communications PLC (LON:SPT), Tyman PLC (LON:TYMN)

Interims: Kier Group PLC (LON:KIE)

FTSE 100 ex-dividends to knock 4.09 points off the index: BHP Group PLC (LON:BHP)

Economic data: US weekly jobless claims

City Headlines