• FTSE 100 index plunges 242 points
  • US stocks down despite strong jobs report

  • US trade deficit in January narrowed to US$45.3bn from a revised December deficit of US$48.6bn

5.10pm: FTSE 100 tanks 

FTSE 100 index finished nearly 3.6% lower on Friday as the global share sell-off continues.

Britain’s blue chip benchmark closed down around 242 points at 6,462 as it emerged over 100,000 people globally have now been diagnosed with coronavirus, with 163 in the UK.

Over the week as a whole, the index lost nearly 1.8%.

US stocks also took a hit on the final trading day of the week but the dip was less severe, perhaps as a very strong monthly jobs report took away some of the pain, and showed that US firms were still hiring despite the health crisis.

Non-farm payrolls increased by a healthy 273,000 jobs last month, smashing estimates for 175,000, while the unemployment rate fell 3.5%.

That said, the Dow Jones Industrial Average slumped 511 points at 25,609 and the S&P 500 shed over 74 at 2,949.

“For risk appetite to return in earnest we need to see a downturn in infection rates,” said Chris Beauchamp, the chief market analyst at IG Index.

“If the rest of the world is following the China script (perhaps too much to hope for) then the growth in cases might begin to slow next week. But it feels like we have a longer and harder road to travel in Europe and the US, with the latter a particular source of concern.

“And here is where the coronavirus has an impact on the presidential election. Trump had been seemingly invincible hitherto, but if his administration is felled by the virus then it throws the election wide open.”

The virus outbreak could result in global economic losses of up to US$347bn, according to a report by the Asian Development Bank (ADB).

3.05pm: US benchmarks plunge again

US benchmark indices joined other global indices down in the dumps as macroeconomic data failed to offset rising fears over the coronavirus.

The Dow Jones industrial average was down 848 points (3.3%) at 25,280 and the S&P 500 was down 103 points (3.4%) at 2,921.

This, despite what Berenberg’s Roiana Reid called an “exceptional” February unemployment report.

“Nonfarm payrolls increased by 273k, the unemployment rate declined, aggregate weekly hours worked surged, and wage growth was solid,” he summarised.

“It reflects labour market conditions before concerns about the coronavirus (COVID-19) intensified in the US so it is more stale than usual. Still, it is worth noting that, in addition to this strong employment data, various measures of consumer and business sentiment reflected optimism through February, supporting our expectation for a solid rebound if COVID-19 disrupts economic activity and hiring in the near term,” Reid said.

James Knightley, the chief international economist at ING, said the jobs reports underlines the story that the US economy was in a fantastic position before the coronavirus fears hit.

The better than expected outcome “won’t count for much as spending slows and recession worries mount due to the economic disruption the virus is already causing,” Knightley predicted.

“Within the details, the manufacturing sector managed to post a 15,000 rise, which was remarkable given the combination of the lingering effect of the China trade battle, slower global demand and the cessation of Boeing 737 Max production having knock-on effects for suppliers across the country. With global demand set to weaken even more in response to Covid-19 and disrupted supply chains further complicating the picture, manufacturing jobs losses, unfortunately, look set to return,” Knightley said.

Meanwhile, the US trade deficit in January narrowed to US$45.3bn from a revised December reading of US$48.6bn.

In the UK, the Footsie briefly perked up following the US jobs report before resuming its inexorable decline. The index is now down 260 points (3.9%) at 6,445, having started the week at 6,581.

2.10pm: Anglo American leads the retreat

OK, that’s the US non-farms payroll interlude over; back to fretting about the coronavirus.

“The survey period for this report was through February 15th, and while it shows the job market didn’t appear to be slowing before the virus really hit the U.S., unfortunately, it doesn’t provide any meaningful insight into the impact of the most recent developments around the Covid-19 outbreak that markets and the Fed reacted to over the course of the week,” said Rob Manrelli, a director at Chatham Financial.

“While the Fed has indicated they will be data-dependent, the current health crisis around the virus outbreak has clearly caused the Fed to be proactive as evidenced by the emergency rate cut this week. Data releases like today’s Employment Report are unlikely to show any meaningful impact from the virus until April at the earliest,” Mangrelli postulated.

“Given the lag in many data releases, market participants may place more weight on coincident economic indicators like weekly jobless claims and survey-based leading indicators such as readings on consumer and business sentiment in the interim. Yields continue to make new record lows in the US and current market positioning would see a Fed Funds rate near 0% by year-end,” he added.

The FTSE 100 was down 232 points (3.5%) at 6,473 with Anglo American Plc (LON:AAL) leading the way down after it declared force Majeure at its Anglo American Platinum subsidiary after problems with a converter plant.

In February, Anglo’s converter plant at the Waterval smelter in Rustenburg was put out of action by an explosion and the company has now discovered water in the back-up plant that has been commissioned, and it does not know where the water is coming from. The water poses a high risk of explosion and the company has opted to temporarily shut down the unit.

The shares were down 8.7% at 1,681.4p.

1.45pm: Shoulder shrug greets US jobs data

US stock market index futures ticked up a smidge after US jobs growth proved surprisingly strong in February.

The Dow Jones is now expected to open at around 25,392, down 721 points. The S&P 500 is seen opening at around 2,932, down 81 points.

In Blighty, the FTSE 100 index has also roused itself a little to pare its loss to 226 points (3.4%) at 6,480.

1.35pm: US non-farm payrolls rise far more than expected

US non-farm payrolls rose 273,000 in February, way above the consensus forecast of 175,000, and unchanged from a revised January figure.

The unemployment rate dipped to 3.5% from 3.6%; economists had expected no change.

US average earnings rose 0.3% in February, in line with expectations, after rising 0.2% in January.

Average earnings were up 3.0% on a year earlier, down from 3.1% in January.

The FTSE 100 was down 242 points (3.6%) at 6,464.

12.50pm: US jobs additions expected to dip to 175,000 in February 

US non-farm payrolls data is due out at 1.30pm (UK time) but it seems a bit of a sideshow to the coronavirus main event.

As Pantheon Macroeconomics said, payroll growth probably slowed in February but not because of the coronavirus; the hit from that is coming later.

“We think today’s February payroll number will be reported at about 140K, undershooting the 175K consensus,” Pantheon said.

“Our story is straightforward; we think the 225K January reading was boosted by a rebound from the below-trend December number, just 147K, and the exceptionally mild winter weather across the country. Both of these factors will be absent from the February numbers, and we think the underlying pace of labour demand has slowed too,” it added.

“But whatever the number, this report is old news. The coronavirus is likely to start hitting job growth very soon, as hiring is scaled back and layoffs rise,” Pantheon predicted.

Ahead of the release, futures markets indicate US benchmarks will open sharply lower.

In the UK, the FTSE 100’s losses have lengthened to 227 points (3.4%) at 6,481.

11.20am: Gold!

It is time to dig out that Spandau Ballet Greatest Hits CD and put “Gold” on repeat, as investors continue to favour the yellow metal.

On futures markets, the front-month contract for gold is up US$19.80 at US$1,686.20 an ounce while the spot price was up US$15.00 (0.9%) at US$1,683 an ounce.

The yellow metal is set for its biggest weekly gain since October 2011.

In contrast, European banking shares are at their lowest point since 2009, when the phrase “credit crunch” was being bandied about as much in market reports as “coronavirus” is these days.

Elsewhere in the financial sector, Aviva PLC (LON:AV.), down 4.0% at 337.4p, has announced its exit from Indonesia.

The insurance giant is to sell its entire shareholding in its joint venture in Indonesia, PT Astra Aviva Life, to its joint venture partner, PT Astra International Tbk.

The FTSE 100 was down 190 points (2.8%) at 6,515, with the index having pulled out of its nosedive as traders await the release of US jobs data for February, due out at 1.30pm.

10.30am: Investors looking for havens

The opposite of a rally is a rout and that’s what we are seeing at the moment in stock markets.

The FTSE 100 is down 195 points at 6,510 but even on a day of widescale carnage, there are some bright spots.

History tells us that supermarket stocks are defensive plays in a market shakeout – people still gotta eat (and buy hand sanitiser if they can find it) – and so it is proving today with Tesco PLC (LON:TSCO) up 1.3% at Wm Morrison Supermarkets PLC (LON:MRW) up 0.3%.

Pharma stocks are also regarded as defensive investments, which may account for why AstraZeneca PLC (LON:AZN), down 1.3%, is outperforming the Footsie despite a disappointing trial result for its bladder cancer treatment.

“Meanwhile, crude prices have shown contempt for yesterday’s OPEC production cut, with a subsequent slump signalling the widespread feeling that the coronavirus impact on demand will be significantly greater than the 1.5mln barrels per day cut yesterday,” said IG Group’s Joshua Mahony.

The price of Brent crude was down US$1.33 (2.7%) at US$48.66 a barrel.

10.00am: Gilt yields fall to historic lows

If market reporters are struggling to find new ways of saying the markets are going down because of fears about the coronavirus, spare a thought for economists.

“It’s almost impossible to predict credibly what the economic impact will be of such an unprecedented and still evolving event but still it is our task to give some guidance,” said ING Macroeconomics’ Carsten Brzeski, before putting its head on the block.

“Gauging the impact of Covid-19 on our own growth scenarios is, therefore, a snapshot and work in progress rather than a perfect or final analysis. It is like steering in the dark; cautious and step-by-step. We currently use the working assumption that the spread of the virus will slow during the northern hemisphere spring and that the global economy will start to stabilise and gradually rebound during the summer months, notwithstanding clear differences across countries and regions,” the ‘think-piece’ note continued.

Some central banks have eased policies, some small countries have “helicoptered” in money and of course, politicians have attempted to sound statesmanlike and ready to act but “to be blunt, no fiscal or monetary easing could have the same impact as a vaccine against Covid-19,” Brzeski concluded.

As the equity shakeout continues, gold-bugs continue to play the smug card. The price of the yellow metal is up 1.1% (US$17.60) to US$1,685.90 an ounce.

Government bondholders are also sitting pretty; as bond prices rise, so the effective yield declines and today has seen the yield on 10-year US Treasurys rise by 17 basis points – there are 100 basis points, or BPs, to a full percentage point while the yield on the 10-year gilt has increased by 8.6 BPs.

“The bond market is scaring the raccoons out of the air ducts like crazy right now. Investors seeking shelter and betting on aggressive policy cuts have driven the hottest bond rally in years, if not ever,” observed Neil Wilson at markets.com.

The FTSE 100 was down 179 points (2.7%) at 6,526.

9.10am: House prices rise more than expected in February

The Halifax House Price Index rose 0.3% in February, ahead of the consensus forecast for a 0.2% rise.

It was the fourth month in a row that the index had shown a month-on-month increase.

Annual house price increases are running at 2.8%, according to the Halifax, down from 4.1% in January. The average house price in the UK, according to the mortgage lender, is just under £241,000.

“Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year,” said Russell Galley, the managing director of Halifax.

Jonathan Hopper, the chief executive of Garrington Property Finders, said price growth may have slowed but it was “still a relatively robust performance”.

“The market has certainly turned a corner and that’s coming across strongly in these figures because buyers and sellers aren’t quite in sync. Buyers have been very active but agents are telling us many sellers have held off going to market until the spring, so there just aren’t enough properties to meet demand at the moment.

“However, talk is already now turning from the staying power of the Boris Bounce to the possible effects of a Coronavirus Crunch.

“Any slowdown in activity is unlikely to be a result of cancelled viewings. They aren’t sporting events and, though we’ve heard of a few vendors cancelling visits because they don’t want strangers in their homes at the moment, they are very much in the minority,” Hopper said.

“Where a pandemic could bite, though, is through the havoc being wreaked on the stock market. A downturn is currently affecting all the world’s indices and this threatens to erode confidence of would-be house hunters in the short term,” he added.

The FTSE 100 was down 91 points (1.4%) at 6,614 with the housebuilders suffering more than most in the wake of the Halifax figures.

Barratt Developments PLC (LON:BDEV), Taylor Woodrow PLC (LON:TW.) and Persimmon PLC (LON:PSN) are all down 2.8%, while Berkeley Group Holdings PLC (LON:BKG) is off 2.4%.

8.45am: Down, down, deeper and down

The FTSE 100 opened firmly in the red at the end of a volatile week as coronavirus fears continued to direct sentiment.

The UK top stocks index opened 87 points lower at 6,618.86

The London arm of German bank Berenberg has assessed the potential economic impact of the global virus outbreak, which it expects to worsen up to April before improving in May.

While it recognises its hypothesis is “somewhat arbitrary”, it is working on the assumption that the net impact of coronavirus, in economic terms at least, will be “near-term recession” in Germany, Italy and Japan.

There is also a “significant risk of a modest recession” for the Eurozone as a whole – and the UK – while Berenberg expects “below-trend” growth in the US in the first half of 2020. It forecasts a global recovery from end of June onwards.  

While the situation in China has stabilised, South Korea, Italy and Iran remain a worry. Here in the UK, where there are 116 cases, and the first fatality has been recorded.

As mentioned in our market preview, there has been a rush into gold, a haven investment, which is bubbling just below US$1,700 an ounce, while the outflow of cash from equities appears to have gone directly into the American government debt market.

“James Carville, the political adviser to Bill Clinton, once said that he wished to be reincarnated as the bond market because ‘you can intimidate everybody’,” said Neil Wilson, analyst at Markets.com. 

“He was not wrong. The bond market is scaring the raccoons out of the air ducts like crazy right now. Investors seeking shelter and betting on aggressive policy cuts have driven the hottest bond rally in years, if not ever.”

US 10-year yields have moved aggressively lower, hitting a fresh record low at 0.8%, while 30-year Treasuries “shipped a few more points” to an all-time low 1.4% and UK gilts have followed suit, Wilson noted. Remember yields move inversely to the current red-hot bond price rises.

“The speed of the decline has been brutally swift, albeit relatively orderly in its progress,” Wilson added.

Worst affected on the Footsie were the travel stocks, with soon-to-be relegated TUI (LON:TUI) leading the charge lower with a 4.3% tumble.

In its wake followed Carnival (LON:CCL) and budget hotelier Whitbread (LON:WTB), down respectively 3.7% and 3.2%.

Proactive headlines:

Echo Energy PLC (LON:ECHO) today extended an existing £1mln loan and, amid weak crude prices triggered by coronavirus impacts, has also decided to seek an additional standby credit facility for up to a further £1mln. In a statement, the company noted that production in Argentina remains in line with the board’s expectations.

PCF Group Plc (LON:PCF), the specialist bank, said trading in the first five months of its financial year has been strong. At its annual general meeting (AGM) today, chief executive officer Scott Maybury will tell shareholders that business origination in the five months to the end of February was up 30% year-on-year.

Open Orphan PLC (LON:ORPH) said its newly-acquired hVIVO business has landed a contract with an unnamed European biotech worth a minimum of £7mln. Researchers will carry out what’s called a human challenge study, which will be used to develop a vaccine against respiratory syncytial virus (RSV), an illness which causes cold-like symptoms. Work is expected to start in the fourth quarter with revenue of £3.2mln expected to be booked in 2020.

NQ Minerals PLC (LON:NQMI) (OTCMKTS:NQMLF), the base and precious metals producer from its Hellyer Gold Mine in Tasmania Australia, announced that it has raised gross proceeds of £176,667 from a placing of 2,523,815 new ordinary shares at 7p each with UK based Institutional investor and a group of private investors for general working capital purposes.

Ashley House PLC (LON:ASH) said trading in its shares on AIM and NEX has been suspended because of the material uncertainty of the company’s financial position. The company was due to quit NEX at the end of this month anyway. The health and housing property partner said it has served notice of its intention to call in the administrators for F1 Modular Limited (F1M), the company’s 76%-owned subsidiary.

Shield Therapeutics PLC (LON:STX), a commercial-stage, pharmaceutical company with a focus on addressing iron deficiency, said it will be presenting at the Hardman & Co. investor forum, providing an overview of the business and the progress being made by the company. The firm noted that its chief executive officer, Carl Sterritt will present at the Hardman investor forum on Tuesday 10 March 2020 at Howard Kennedy LLP, 1 London Bridge, London, SE1 9BG starting from 5.30pm.

88 Energy Limited (LON:88E) (ASX:88E) has announced that its annual general meeting is scheduled to take place at 10:00am (WST) on 9 April 2020 at the Celtic Club, 48 Ord Street, West Perth WA 6005.

6.30am: A good day to be in gold 

It’s another good day to be holding gold after the S&P 500 index in the US suffered a very rare triple-digit fall yesterday.

The FTSE 100 is set to suffer its own (very less rare) triple-digit fall of its own, according to spread betting quotes, which indicate the index will open at around 6,586, down 111 points.

As usual, the spread of the coronavirus is driving sentiment and even the release of the US non-farm payrolls data for February this afternoon is unlikely to change that.

“Various governments around the world have revealed plans to help control the [coronavirus] situation, but after a while dealers started to wonder how bad is the crisis if all these governments are so desperate to announce packages aimed to alleviate the problem. At a certain point, government intervention increases nervousness, and that is what we saw yesterday,” said CMC’s David Madden.

“In a space of a few days, the Italian government more than doubled the size of their health fund to €7.5 billion. The administration in Rome will ask the EU’s permission to increase the budget deficit by 0.35% as a way of tacking the crisis. This projects an image of the country that’s behind the curve when it comes to dealing with the coronavirus, and it is possible we will see other countries do something similar,” he added.

The World Health Organization (WHO), however, has issued what it called a long list of countries that are not showing “the level of political commitment” needed to address the coronavirus threat.

While the S&P 500 surrendered 106 points yesterday to close at 3,024, the Dow Jones average’s decline did not quite make it into the four-digit territory; it fell 970 points to close at 26,121.

Red is the predominant colour on traders’ screens in Asia this morning, too, with Japan’s Nikkei 225 off 640 points at 20,689 and Hong Kong’s Hang Seng index down 631 points at 26,137.

Aside from the US jobs data, there is not a lot of macroeconomic and corporate news flow expected today.

US non-farm payrolls are expected to have expanded by 175,000, compared to 225,000 additions in January. The unemployment rate is seen holding steady at 3.6%. Yearly average earnings are expected to ease to 3% from 3.1%.

In the UK, the Halifax house price index is due to be published at 8.30am. Economists are expecting the index to show a 0.2% monthly increase.

Significant announcements expected on Friday:

Finals: SIG PLC (LON:SHI), Global Ports Investments PLC (LON:GLPR)

Economic data: US non-farm payrolls, US balance of trade, UK house prices

Around the markets:

  • Sterling: US$1.2957, up 0.07 cents
  • 10-year gilt: yielding 0.336%, down 3.5 basis points
  • Gold: US$1,679.90 an ounce, up US$11.90
  • Brent crude: US$49.47 a barrel, down 52 cents
  • Bitcoin: US$9,129, up US$3

City headlines:

Financial Times

The John Lewis Partnership has cut its staff’s annual bonus to 2% of salary, which is the lowest level since 1953.

Regional airline Flybe collapsed after Virgin Atlantic refused to pump in more money after a sharp drop in its own bookings caused by coronavirus.

Air travel industry body IATA estimates the spread of the coronavirus outbreak could cost global airlines up to US$113bn in lost revenues this year.

The Times

Fears about the Covid-19 outbreak sent world stock markets deep into the red again yesterday as the virus spread in the US and UK.

The first full year of ownership of the aerospace and engineering group GKN has helped Melrose Industries to report rising revenues and profits.

JCB has reinstated its full production schedule at UK factories but warned of “new threats” to its supply chain.

Concerns are growing that Norwegian Air Shuttle will be forced to shore up its balance sheet after the low-cost airline scrapped its profit guidance for the year.

A row has broken out between James Benamor and Amigo Holdings after the founder of the troubled guarantor loans business claimed the company was “committing slow-motion suicide”.

The Daily Telegraph

More than a thousand workers were evacuated from their offices in London or told to work from home after a confirmed case of coronavirus was found.

Flybe’s rivals scrambled to fill the void left by Europe’s biggest regional airline on Thursday, launching replacement services for half of its main routes within hours of the company’s collapse.

Capita shares fell nearly 40% after it delivered annual results amid news that the turnaround of the outsourcer would “take longer and cost more.”

Cineworld saw its share price drop by as much as 24% before recovering slightly following the announcement that the latest James Bond film was being delayed by several months.

Twitter’s chief executive Jack Dorsey is considering cancelling plans to move to Africa as he faces an activist shareholder bid to oust him.

Virgin Media exposed the personal information of 900,000 customers online after a marketing database was accidentally left online for 10 months.

Daily Mail

GVC, the owners of Ladbrokes and Coral, made £1.5 million profit per day as its online business boomed.

The High Street is bracing for a slump as shoppers stay at home amid the coronavirus outbreak.

The Guardian

Peachy, one of the UK’s best-known payday lenders, has collapsed into administration.

The fashion label of Henry Holland, the designer famous for his slogan T-shirts, has called in administrators.

A powerful committee of MPs has criticised Andrew Bailey, the incoming governor of the Bank of England, for his management of the UK’s main financial watchdog.