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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

US and UK stock markets plunge as coronavirus panic hits shares — as it happened

Traders on the floor at the New York Stock Exchange today, as the Dow briefly fell into a correction
Traders on the floor at the New York Stock Exchange today, as the Dow briefly fell into a correction Photograph: Brendan McDermid/Reuters

Closing summary

Time for a quick recap

Financial markets have suffered fresh, heavy losses, as the coronavirus crisis escalates - threatening to cause major economic disruption.

Britain’s FTSE 100 slumped by 3.5%, taking it down more than 10% from its recent peak. The index has lost 8%, or £152bn, this week alone.

There were similar heavy losses across Europe, where stocks were hit by fresh cases of Covid-19 - including in Italy - and a warning from France’s president that an epidemic could be close.

Investors ditched stocks and oil, in favour of safe-haven asset such as American government debt -- driving US borrowing costs to record lows.

Wall Street had another turbulent day too, with the Dow suffering its worst points fall ever - down 1,20 points. Further losses are expected on Friday.

Traders are very concerned about the impact of more cases in the US, with California revealing it is tracking 8,400 people.

Goldman Sachs’s warned that US corporate profit growth could be wiped out is also casting a shadow.... while Bank of America cutting its growth forecasts to an 11-year low.

There are also fears that the virus could even push the eurozone into recession.

Several companies, from Standard Chartered bank to foam shoe-maker Crocs, warned that they’d miss financial targets due to the impact of Covid-19.

But some analysts are advising clients to buy shares at current levels, wagering that policymakers will act to protect growth.

Goodnight. GW

The sell-off is heading back round to Asia-Pacific markets, where shares are expected to fall heavily on Friday.

Investors are very worried about large coronavirus outbreak occurring in the US, now that California is monitoring 8,400 people (it emerged earlier).

Kyle Rodda of IG explains:

Panic in global markets has escalated, still on fears that the coronavirus is rapidly evolving into a global pandemic. Market volatility is particularly high, with the VIX hitting as high as 33. That’s sent stocks plunging even further, with many of the world’s major benchmark indices entering what’s considered in technical analysis a “market correction”. Naturally, the demolition of risk-appetite has seen traders flee to safe-havens, many of which have traded at historically significant levels.

The catalyst for the latest deterioration in market sentiment has been the burgeoning belief that the coronavirus has arrived on US shores. Several reports broke in the last 24 hours suggesting that the possible cases of the disease has spiked, and has become spread wide across the country. A press conference held by US President Trump failed to quell concerns. Instead, traders have latched onto this morning reports that the state of California is monitoring 8,400 for the virus.

With stocks plunging, and government bond yields (interest rates) at record lows, the markets are sending a very worrying signal.

“Stocks and bonds say we’re doomed,” said Chris Rupkey, chief financial economist for MUFG Union Bank (via Bloomberg).

“Anyone who has a better idea for what lies ahead please let us know because right now the direction ahead for the economy is straight down.”

US tech stocks have had their worst day in eight years, Bloomberg reports:

The Nasdaq Composite Index sank 4.6% to 8,566.48, the lowest in almost 12 weeks on the largest tumble in more than eight years.

This is Wall Street’s worst day in two years, reports CNBC:

Thursday marked the Dow’s biggest one-day points decline in history. The S&P 500 also closed below 3,000 for the first time since last October.

Those losses put the Dow, S&P 500 and Nasdaq in correction territory, down more than 10% from their record closes. It took the Dow just 10 sessions to tumble from its all-time high into a correction. The S&P 500 and Nasdaq set record highs last week

Both the Dow and the S&P 500 had their worst day since February 2018 while the Nasdaq posted its biggest one-day loss since August 2011.

Dow plunges by nearly 1,200 points

Newsflash: the Dow has posted its biggest points drop ever, shedding another 1,200 points in a late burst of selling before the closing bell.

More than 4% has been lost today, following big losses earlier this week.

This puts the US stock market firmly into a correction (down over 10% from last week’s record high).

It also means this is the worst week for the US market since the 2008 financial crisis.

Heavy losses on Wall Street:

The sell-off is accelerating in late Wall Street trading.

This is pushing the Dow down by another 3.5% today, or over 900 points....

Scott Minerd of financial services firm Guggenheim Partners is very concerned about coronavirus, and its impact on the markets and the global economy.

He told Bloomberg TV that “this is possibly the worst thing I’ve ever seen in my career”, a time-span which includes the 1987 crash and the 2008 financal crisis.

Pointing to the jump in cases in Italy and South Korea overnight, Minerd warns:

“This has the potential to reel into something extremely serious...

“It’s very hard to imagine a scenario where you can actually contain this thing, and so that’s the thing that to me is very frightening.”

Minerd also warned that the US economy is already being hit:

Hotels in New York are empty. Airlines.. people are not travelling. It’s a demand shock [as well as a supply shock]

Updated

As things stand, the Dow Jones has shed 2,600 points so far this week -- or roughly 9% of its value.

Here’s the scene on the New York stock exchange floor this afternoon, amid another volatile session:

Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., February 27, 2020.

Back in the UK, Northern Ireland has just reported its first confirmed case of coronavirus, taking the total number of UK cases to 16. Our main news liveblog has all the details.

Earlier today, French president, Emmanuel Macron warned that France was on the brink of a coronavirus epidemic.

My colleague Peter Beaumont explains:

With new evidence of unexplained cases of transmission emerging in Spain, Germany and France, the mounting public health crisis on the continent forced the cancellation of public events from Geneva to Greece, including sporting events, carnivals and trade conventions amid further sharp stock market falls and disruption to European travel.

“We are facing a crisis, an epidemic that is coming. We know that certain countries are already much more affected than us,” Macron said while visiting staff at the Pitié-Salpêtrière hospital in Paris, where the first French victim of the virus, a 60-year old teacher, died on Tuesday night.

“We know that we’re only at the beginning. We’re going to try to make the right decisions,” Macron added.

Updated

Ut oh. Wall Street is on the slide again.

The Dow Jones industrial average is down another 2% today, 570 points lighter at 26,387.

The sell-off picked up, following a report that more than 8,000 people in California are being monitored for coronavirus symptoms.

With the death toll in Italy now rising to 17, there is much concern about how the crisis will pan out.

Back on Wall Street, stocks are attempting a bounce-back.

The Dow Jones industrial average is now just 213 points down, or 0.8%, at 26,744.

The move comes as Mike Pence recruits treasury secretary Stephen Mnuchin and economic advisor Larry Kudlow to his new coronavirus task force. Neither are noted experts in virology or immunisation, but they’re both likely to push for interest rate cuts to protect the economy.

Nearly every stock on the FTSE 100 fell today:

The FTSE 100 top and bottom movers, February 27 2020
The FTSE 100 top and bottom movers today. Photograph: Refinitiv

JP Morgan: buy the dip

The stock market slump is now an opportunity to buy shares.

So argues JP Morgan’s chief US equity strategist, Dubravko Lakos-Bujas, who thinks central bankers and politicians will take steps to support growth, boosting markets.

Lakos-Bujas told clients:

While it is easy to turn cautious on the market after a ~10% drop, we argue investors should not discount the benefit of announced and unannounced global policy responses that are likely to outlast the impact of COVID-19.

It’s a sensible theory. But... investors would still be taking a gamble.

We still don’t know how far the coronavirus will spread, how many people will be infected or die, what quarantine measures will be taken, or how long it will take China’s factories to return to work.

Streaming service Netflix is defying the selloff, and has jumped by 2.3% today.

Indeed, it’s up a fifth this year -- as investors conclude that it could profit from the coronavirus. If people are afraid to go to the cinema, or not allowed into work or school, they’ll end up watching TV instead.

The coronavirus poses a clear threat to Europe’s fragile recovery, fears Ritu Vohora, equities Investment Director at M&G Investments.

She writes:

“The coronavirus outbreak has replaced trade wars as the dark storm bearing on markets, sending jitters across global financial markets amid fears of a hit to the global economy.

The surge of new coronavirus cases outside China has shaken investor hopes that the outbreak had been contained, Vohora explains:

This is no longer just an Asia issue (even though the number of reported cases in mainland China has declined), the virus has spread to Italy, South Korea and Iran and there are fears this could develop into a global pandemic. Markets are starting to consider what this means for global trade and travel, while bond markets are worried about recessionary risks. With the coronavirus now in Europe, the region is particularly exposed to trade and the virus poses a threat to its fragile recovery.

Indeed, we saw the first signs of the economic fallout last week, with various Asian PMI surveys showing sharp losses.”

Today markets are pretty grim -- as the worst week since 2011 grinds on.

Global stock markets
Global stock markets Photograph: Refinitiv

European stock markets also had a grim day, with the Stoxx 600 closing 3.6% down at 389.89 points.

That, I reckon, puts it JUST into a correction -- down just over 10% from its peak last month.

Updated

FTSE 100 loses another £61bn as sell-off deepens

Newsflash: Britain’s FTSE 100 has closed at a new one-year low, deep in correction territory.

After another torrid session, the blue-chip index has ended the day down 246 points, or 3.5%, at 6796 points.

That’s the lowest point since January 2019. It means the FTSE 100 has shed 8% of its value this week alone, and is more than 10% below its recent peak in January.

The slump wipes around £61bn off the blue-chip index, virtually equalling the losses suffered on Monday.

It means the Footsie has lost more than £150bn of value this week -- as anxiety over the impact of a full-blown Covid-19 pandemic hits stocks worldwide.

Updated

In a break from the gloom, Starbucks chief executive has said the situation in China is improving, with 85% of its coffee stores now open.

ECB chief Christine Lagarde has downplayed the prospect of the central bank intervening over the coronavirus - telling the FT that “we are certainly not at that point yet.”

Banks urged to be vigilant of Covid-19 risks

Global banks, and their supervisors, are being urged to show vigilance about the coronavirus crisis - and share details of any economic shocks it causes.

The Basel Committee, which sets standards for the financial sector, issued this warning after discussing the coronavirus crisis today:

The Committee discussed the financial stability implications of the coronavirus outbreak (Covid-19) for the banking system and exchanged information on the business continuity measures that banks and authorities have put in place. The Committee encourages banks and supervisors to remain vigilant in light of the evolving situation and notes the importance of effective cross-border information sharing and cooperation when dealing with such shocks.

Traders at the opening bell at the New York Stock Exchange (NYSE) today
Traders at the opening bell at the New York Stock Exchange (NYSE) today Photograph: Johannes Eisele/AFP via Getty Images

The New York Stock exchange says it is prepared for any disruption caused by the coronavirus, should it reach America’s financial heartland.

NYSE says:

“The NYSE is carefully monitoring the spread of COVID-19 and has robust contingency plans, tested regularly, to enable continuous operation of the NYSE exchanges should any facilities be impacted.”

Dow keeps tumbling

Newsflash: The Dow Jones industrial average is now down 900 points!

That wipes another 3% of the benchmark index, sending it deeper into correction territory. It is threatening to push the Dow below 26,000 points, for the first time since last summer.

The Dow already lost over 1000 points on Monday, almost 900 points on Tuesday, and 124 points on Wednesday.

Stocks are continuing to tumble, alarmingly, in London, as traders watch Wall Street tumble again.

The FTSE 100 index is now down 4.3% -- a very serious decline -- losing 308 points to 6735. That pushes it deeper into correction territory.

This is an even deeper plunge than we saw on Monday, and wipes out another £75bn or so of value.

It takes the total losses this week to over £160bn!

Consultancy Capital Economics has warned that a full-blown global Covid-19 pandemic could be as bad as during the financial crisis, when global GDP fell by 0.5%.

My colleague Richard Partington explains:

Jennifer McKeown, head of the global economics service at the consultancy, said that there was still hope the outbreak could be contained with limited negative impact for businesses and countries.

However, she warned: “One thing becoming clear is we just can’t predict the spread of this and how bad it can be. But it’s not difficult to get to something similar to the 2008 crisis with a pandemic situation. Of course, we hope it won’t get that bad.”

Why are stocks tumbling again?

There are several reasons why Wall Street is an almighty funk again today.

Partly, there is disappointment that Donald Trump didn’t provide more reassurance when he discussed the Covid-19 crisis last night. The president put VP Mike Pence in charge of the response, and said he would spend “whatever’s appropriate”. But this was undermined by news of a new case in California.

Jeffrey Halley, senior Asia Pacific market analyst at Oanda, wrote in a note.

“President Trump finally addressed the arrival of coronavirus on U.S. shores, and the government’s response to controlling its potential spread…Neither inspired an already shaky North American market,”

There has been a fresh flurry of cases outside China today, with 26 more deaths in Iran and two in Italy.

The economic cost of the crisis is also mounting, with Microsoft, Standard Chartered and Paypal all warning they will miss financial targets.

Goldman Sachs’s warning that US corporate profit growth could be wiped out is also casting a shadow.... as is Bank of America cutting its growth forecasts to an 11-year low.

Europe also in correction

In another blow to investors, Europe stock markets have also just plunged into correction territory, matching Britain’s FTSE 100 and the three major Wall Street indices today.

There are heavy losses of at least 3% in Frankfurt, Milan, Madrid and Paris today. That has dragged the EU-wide Stoxx 600 index down 10% from its recent peak.

Travel stocks are under real pressure on Wall Street, with American Airlines tumbling by 9% and Delta Air down 5.5%.

Royal Caribbean has shed 10%, as investors conclude that the cruise industry is going to be very badly hit by the coronavirus.

Twenty six of the thirty blue-chip companies on the Dow Jones industrial average are sliding today.

Chemicals maker Dow Inc is the top faller, down 3.8%, followed by Disney, then oil producers Chevron and Exxon (hit by the weak oil price).

The top movers on the Dow Jones industrial average
The top movers on the Dow Jones industrial average Photograph: Refinitiv

The scale and speed of this sell-off is quite stunning, as this screengrab from Bloomberg shows:

S&P 500 key sectors

Covid-19 has punctured the optimism that pushed the US stock market to a series of record highs, says Michael Hewson of CMC Markets:

He writes:

The sharp declines in equity markets in the last week have turned investor sentiment on its head in a fashion that is almost schizophrenic in nature.

From the unshakeable optimism seen at the beginning of the year, investors have done a complete U-turn switching from excessive optimism to outright pessimism in less than a week.

Recent warnings from Microsoft and Apple are likely to just be the start and given that tech has led this rally over the last few years it could well be tech that causes further declines.

What a week! And it’s only Thursday morning in New York:

Goldman Sachs’s warning that US profit growth could be wiped out by the coronavirus is not helping the mood on Wall Street today.

This is Wall Street’s first correction since autumn 2018, when fears of a global slowdown rocked markets.

Bloomberg is reporting that the S&P 500 is on track for its worst week since 2008.

Wall Street plunges into a correction

NEWSFLASH: The Dow Jones industrial average has plunged into correction territory at the start of trading on Wall Street.

The benchmark index has tumbled by 520 points, or 1.9%, to 26,437, as a fresh wave of alarm over the coronavirus sweeps the New York stock exchange.

That’s more than 10% off its record high set just two weeks ago, of 29,551 points.

This is the sixth day of losses in a row, and there are some ugly moves out there -- the S&P 500 and the tech-focused Nasdaq are also in correction territory!

US bond yields hit record lows.

US government bond prices are hitting fresh record highs today, as investors try to find a safe place for their money.

This has driven the yield on 10-year Treasury bills down to just 1.27% today, an all-time low. Yields move inversely to prices. Such record levels shows that the markets are worried about US growth prospects.

Hold onto your hats, because Wall Street is about to open....

Crocs Plastic ShoesBEY266 Crocs Plastic Shoes

Footwear-maker Crocs has also been hit.

The company, famous for its foam clog shoes, has warned that economic disruption in Asia will wipe $20m to $30m off its revenues.

It says many of its vendors in China remain closed, while others are only opening for limited times (and are seeing low customer numbers anyway).

Paypal: Covid-19 will hurt revenues

The German headquarters of PayPal

Newsflash: Paypal has just warned that the coronavirus will knock its revenues.

The online payments company says revenues for the current quarter will only reach the low end of its previously issued forecast, of $4.78bn to $4.84bn.

And that’s due to Covid-19, it says:

We currently estimate the negative impact from COVID-19 to be an approximate one percentage point reduction, on both a spot and foreign currency-neutral basis, to PayPal’s year-over-year revenue growth for the first quarter, as compared to the revenue guidance provided on January 29, 2020.

“Stronger performance quarter-to-date across our diversified business is partially offsetting this one percentage point negative impact.”

You might think that online payments firms would benefit from the quarantine measures - as more people are having to shop over the web. But clearly the overall economic impact is negative (as Mastercard also warned this week).

The oil price is hitting new one-year lows too.

US crude has shed $2 per barrel to $46.72, a 4% tumble today.

Budget airline easyJet is being hurt very badly by the selloff.

Shares in easyJet are down 10% this morning, at £10.74. That’s down from £15 at the end of last week.

Clearly, air travel is going to be hit by the quarantine measures already being implemented in countries such as Italy -- usually a popular destination for easyJet, which flies to Rome and Venice.

Sell-off accelerates

Newsflash: The FTSE 100 has just tumbled to a new 13-month low.

The ongoing sell-off has pushed the index down by another 2.8%, or 202 points, to just 6839.

That wipes out another £50bn of value off the biggest companies listed in London.

The FTSE 100 over the last two years
The FTSE 100 over the last two years Photograph: Refinitiv

Travel firms, airlines, retailers and banks are all being hit hard, on fears of a global coronavirus pandemic that would hurt the world economy, weaken supply chains, and damage global trade.

WPP is still the biggest faller, now down 16% after reporting disappointing results.

The ad giant has also introduced its own self-quarantine policy, with anyone returning from China, Hong Kong, Singapore, South Korea, Japan, Iran or “specific lockdown areas” in northern Italy told they must work remotely for 14 days from the date of return. More here:

Masked revellers take part in the “Plague Doctors Procession” on Saint Mark Square in Venice on February 25, 2020, during the usual period of the Carnival festivities which have been cancelled following an outbreak of the COVID-19 novel coronavirus in northern Italy.
Masked revellers take part in the “Plague Doctors Procession” on Saint Mark Square in Venice on February 25, 2020, during the usual period of the Carnival festivities which have been cancelled following an outbreak of the COVID-19 novel coronavirus in northern Italy. Photograph: Andrea Pattaro/AFP via Getty Images

The coronavirus is also having a serious impact on Venice’s tourist business.

The Venice local hoteliers association has reported that occupancy rates fell by 40% after authorities cancelled the final two days of this year’s Carnival.

That was a fresh blow - as hotels were already reeling from flooding earlier this year.

Associated Press have more details:

We understand the fear that is spreading but at the same time we are aware that our health care system is holding and we believe that the image of efficiency of our area will win out,’’ said Daniele Minotto, the hotel association’s deputy director.

Venice city councillor for economic development Simone Venturini said that the economic impact of the new virus outbreak should worry national authorities as much as the impact on public health.

Do this week’s losses mean it’s time to buy the dip?

Not according to BNY Mellon’s chief strategist Alicia Levine.

She warns investors that they should resist piling into the stock market until they know more about coronavirus, even though stocks are around 7% cheaper than a week ago.

Levine told Marketwatch:

“If you think it is essentially a short-term problem, a hit to growth, but then it is over by the summer, then you’re fine going into the market.

But if you think it is worse than that, then you have to play that out.”

Oof! Goldman Sachs has just warned that the coronavirus could wipe out all US earnings growth this year, if it “becomes widespread”.

The Wall Street investment bank has also lowered its baseline forecast for earnings growth, due to the “severe decline in Chinese economic activity” this quarter.

Global growth to be 'weakest since 2009'

Ouch! Bank of America has slashed its forecasts for the global economy, predicting the worst year since 2009, following the financial crisis.

Its economics team predict the world economy will only grow by 2.8% this year, down from 3.1% (which was already below the IMF’s 3.3%).

BAML fears the eurozone will only grow by 0.6%, down from 1%, while China’s GDP would only grow by 5.2% -- the weakest since 1990.

It warns there is a lack of momentum in the global economy, due to China’s aggressive response to the COVID-19 outbreak and the impact of the virus on other economies.

Updated

Standard Chartered’s CEO, Bill Winters, says his company is struggling to assess the impact of coronavirus.

Speaking after the bank admitted it would miss income growth targets, Winters explained that the outbreak was a blow to its chances:

“We have had a good start to 2020, but we recognise there are some substantial headwinds that are mounting.

And most obvious is the coronavirus, which is playing itself out in ways that none of us as yet fully understand [in terms of] how exactly this will progress.”

Wall Street is set to fall when trading begins in under three hours time, as New York traders catch up with the latest coronavirus news.

The Dow is set to shed another 250 points, or almost 1%.

That would confirm that Donald Trump’s statement on the virus last night, putting vice-president Mike Pence in charge of America’s response, hasn’t reassured investors.

Ed Moya of trading firm OANDA says the discovery of a US coronavirus case of ‘unknown’ origin in California will hit shares.

US equities are poised to open lower after the CDC announced the first possible community spread of the virus in the US. The CDC cannot account for how a California resident contracted the virus. President Trump’s press conference failed to calm markets as his overall optimistic tone was often balanced with warnings from the health experts.

The S&P 500 is having the worst week since the financial crisis and it is unlikely to get any better as the corporate response is delivering a wrath of profit warnings.

FTSE 100 on track for worst week since 2011

This is turning into the worst week for the London stock market since the heights of the eurozone debt crisis.

As things stand, the FTSE 100 has lost 505 points since the opening bell on Monday morning -- or 6.8% -- dragging it to a 13-month low.

That’s the biggest slump since the first week of August in 2011, when the index tumbled by 9.7%. That was the week when confidence in Greece’s second bailout evaporated and Italy and Spain were dragged into the crisis.

European markets have suffered even bigger losses this week, with the Stoxx 600 down 7.8% already. That’s also the worst weekly performance since August 2011.

Here’s the state of play:

  • FTSE 100: down 145 points at 6898, -2% today.
  • Stoxx 600: down 9.9 points at 394.7, -2.45% today
  • German DAX: down 296 points at 12,478, -2.3%
  • French CAC: down 130 points at 5,553, -2.3%
  • Italian FTSE MIB: down 414 points at 23,009, -1.7%

Sir Jon Cunliffe, deputy governor of the Bank of England, has warned that central banks may not be able to help much.

Speaking in London, Cunliffe warned that monetary policy can’t do much about a “pure supply shock” - ie, if coronavirus prevented goods from getting into the UK.

The pound has lost almost half a cent this morning, after the UK government threatened to walk away from trade negotiations with the EU.

Sterling dropped to $1.2867, close to a three-month low, as Boris Johnson published the UK’s negotiating mandate as he pushes for a Canada-style trade deal.

European Central Bank sounds alarm about coronavirus

ECB’s Isabel Schnabel.
ECB’s Isabel Schnabel. Photograph: Ralph Orlowski/Reuters

A senior policymaker at the European Central Bank has revealed the ECB is “very worried” about the coronavirus, and its impact on the eurozone economy.

Isabel Schnabel, who joined the ECB’s executive board in January, told an audience in London that the crisis threatens the global economy - and the euro area too.

She said (via Reuters):

“All of us are very worried about what is currently happening with respect to the spread of the coronavirus.

“We know that this is really raising uncertainty to a large degree, for the global growth outlook but of course also for the outlook for the euro area.”

“But what we really need to understand when we are doing monetary policy is what are the potential medium-term implications, and at the moment this is unclear.”

Eurozone growth slowed to just 0.1% in the last quarter, with Germany stagnating and France and Italy both shrinking. ECB interest rates are already at record lows, but some investors are anticipating a cut by the end of the year.

A rate cut might stimulate the economy....but it won’t do anything to prevent Covid-19 spreading.

Oil hits one-year low (again)

Fears of a global slowdown have driven US crude oil prices down to a 13-month low.

US crude has dropped by almost a dollar per barrel to $47.83, the weakest since January 2019.

Chart of the morning: Closing all Macau’s casinos, to curb the coronavirus’s spread, has had a severe, if predictable, impact on revenues:

After a very rocky start, the FTSE 100 appears to have stabilised.

It’s currently down 121 points, or 1.7%, at 6921. That would be a new 13-month closing low, leaving the index on the brink of an official correction.

Most of the index is in the red, with travel firms, banks and consumer stocks falling badly (along with WPP).

Just 12 shares are up, mainly defensive stocks such as British American Tobacco - which also posted strong results today - and National Grid.

FTSE 100 February 27
The FTSE 100 this morning Photograph: Refinitiv

Artur Baluszynski, head of research at Henderson Rowe, says investors are pricing in a ‘worst case scenario’ for Covid-19’s impact on the global economy.

If one looks at the history of mini-pandemics, the longstanding advice from Warren Buffet is “buy when others are fearful” which was seen by many as an almost guaranteed returns booster.

However, what we know now is that the COVID-19 virus is highly contagious but not highly lethal. This is good news for patients but bad news for the global economy, as it means that the virus can survive longer and spread easier.

Disruptions to the labour force combined with a major slowdown, and in some cases full scale halt to the global supply chain channels, could pose a serious threat to the Chinese economy and global stock markets. European economies such as Italy and Germany, already weakened by the ongoing US-China trade war, are unlikely to escape unscathed. The news of factory shutdowns coming out of Italy is pretty worrying.

Updated

UK consumers could soon see shortages due to Covid-19, warns Dr Jonathan Owens, logistics expert from the University of Salford Business School:

We are seeing no big breaks in the supply chains yet, but what is arriving at our ports now may have been ordered five to six weeks ago. So, if we do see shortages this will be in the coming weeks.

Looking to alternative sourcing is not the immediate answer, as this is more a medium to long term solution. In addition, it is not clear how long it would take to get an alternative source in place and operating efficiently within the existing supply chain.

Also, there’s no guarantee that a new supplier would avoid being stricken by the coronavirus either, he adds.

The coronavirus will force the IMF to tear up its growth forecasts at its Spring Meeting in April, predicts Neil MacKinnon, global macro strategist at VTB Capital:

There is no respite for financial markets as the coronavirus spreads outside China. The reality is that the IMF is going to have to rewrite its projections when they are next due in April.

While the Fund is not known for ever predicting a recession, and its projections tend to be near consensus thinking, it cannot be ruled out that global GDP growth returns to 2.0% – especially given the EM and Asian economies are at the forefront of supply chain disruptions and export declines.

The IMF had predicted global growth of 3.3% this year, up from 2.9% in 2019 (corrected).. That now looks highly unlikely, given the disruption in China.

Updated

Shares in WPP, the world’s biggest advertising company, have plunged by 16% -- on track for its worst day since 1992!

And for once, we can’t blame Covid-19. Instead, the company has disappointed investors by reporting a 1.9% drop in revenues in the last quarter - and warned that sales will be stagnant this year.

That’s without factoring in the impact of the coronavirus.

Chief executive Mark Read said.

“I am optimistic about the future of our industry and WPP’s position within it, although there is still much more work to do,”

Investors seem less optimistic.

Tag Heuer Link stainless steel man’s watch.

The coronavirus has forced a major watch fair to be cancelled.

The Watches & Wonders watch fair will not take place in Geneva this year, due to concerns that it could spread the virus.

Organisers of the show, which was popular with Chinese retailers, say:

“In view of the latest developments concerning the worldwide spread of the COVID-19 coronavirus, it is [our duty]... to anticipate the potential risks that travel and important international gatherings could entail.”

Many other trade fairs have already been cancelled or postponed, which will presumably have a knock-on impact on orders this year.

Troubled luxury carmaker Aston Martin has warned that the coronavirus could hurt its sales, and bog down its supply chain.

Aston Marton hit investors with more bad news today -- a loss of £130m for last year, and a forecast of “materially lower” sales in 2020.

It cautioned:

Covid-19 has the potential to impact both the supply chain and customer demand in China and other markets. China was the company’s fastest-growing market in 2019 and represented 9% of total wholesales.

Analysts are worried that Aston Martin’s new SUV, called the DBX, could suffer from the Covid-19 outbreak. That would be a serious blow for the company, which is already being bailed out by fashion mogul Lawrence Stroll.

Shares in the company have slumped 15% to a record low of 334p this morning. Investors who paid £19 per share in its flotation, in October 2018, must be absolutely furious.

Covid-19 fears have driven European stock markets down to a fresh four-month low this morning.

Paul Donovan of UBS says investors fear a slump in consumer spending:

The importance of the consumer (globally) is why fear of the virus has the potential to do so much economic damage. If fear is contained at current levels, the consumer will support growth. If fear takes hold in the real world, the economic damage will be significant.

US President Trump gave a press conference to reassure Americans last night. US Google searches for “coronavirus” surged immediately afterwards.

Market analyst Connor Campbell of SpreadEx blames president Trump for today’s rout:

With the coronavirus death toll approaching 3000, South Korea suffering another swell of cases, financial warnings from the likes of Microsoft, and the launch of an emergency response plan in Australia, it was hard to find even a modicum of comfort on Thursday morning.

The fact Mike Pence – whose policies helped lead to Indiana’s worst outbreak of HIV, not at the height of the crisis, but in 2014/15 – has been put in charge of the US response to the coronavirus was arguably the tipping point for investors.

It’s an unserious choice by a President who, on Wednesday night, seemed too blasé about the issue for the market’s liking – especially since former Fed chair Janet Yellen speculated that a surge of cases in America could force the country into a recession.

Democratic congresswoman Alexandria Ocasio-Cortez also expressed deep concerns last night:

Standard Chartered, the bank focused on Asia-Pacific markets, has cut its income growth target due to coronavirus.

It warned shareholders it probably won’t hit its previous target of 5-7% income growth, because of the impact of Covid-19 (plus the wider economic slowdown, and the protests in Hong Kong).

Shares in Standard Chartered have slid by 5% in early trading, helping to push the FTSE 100 down.

The European markets are a sickly sea of red this morning.

This fresh wave of selling has wiped another 2% off the EU-wide Stoxx 600 index.

The consumer sector is leading the rout, followed by energy stocks, tech firms, financial companies, industrial stocks and miners (so most of the index, basically!).

European stock markets, February 2019
European stock markets, February 2019 Photograph: Refinitiv

Nearly every company on the FTSE 100 is down today, with travel companies among the top fallers.

In London, budget airline easyJet has slumped by 8% this morning to its lowest level since October. Holiday firm TUI has shed 4.3%.

Cruise firm Carnival are down 3%, at their lowest level since 2014! They’ve lost a sixth of their value since the coronavirus outbreak began.

I reckon the FTSE 100 has plunged into a full-blown correction.

Today’s slump means the index is more than 10% below its recent peak, of 7674 points set on January 17th.

FTSE tumbles again

Newsflash: Britain’s FTSE 100 has fallen more than 2% at the start of trading.

The blue-chip index has shed another 153 points to 6,887. That means it has plunged by 7% this week, as coronavirus fears have swept the City.

Roughly £38bn has been wiped off the index this morning, on top of the £97bn lost on Monday and Tuesday.

The FTSE 100
The FTSE 100 Photograph: Refinitiv

Other European markets are taking a tumble too, with Germany’s DAX tumbling by another 1.8% and France’s CAC down 1.9%.

New Zealand is also bracing for an economic hit from Covid-19, having already seen exports to China cancelled:

Reckitt: strong demand for sprays and disinfectant

Bottle of Antiseptic Dettol liquid disinfectant

Consumer goods group Reckitt Benckiser says this morning that demand for its Dettol antibacterial soaps, sprays and wipes and its Lysol cleaning and disinfecting products has risen due to the coronavirus outbreak.

At the same time, it has suffered some disruption to its supply chain in China.

The company told shareholders this morning:

“It is too early to fully assess the impact of the COVID-19 outbreak on the operational and financial performance of the Group. We are committed to China, to the health of our consumers in China and to the health and safety of our employees in China.

“We are seeing some increased demand for Dettol and Lysol products and are working to support the relevant healthcare authorities and agencies, including through donations, information and education. We do see increased activity online for our consumers in China. Conversely we are seeing some disruption to offline retailers, distribution channels and the supply chain connected to China.”

Investors are “vigilant and broadly fearful” of the growing coronavirus outbreak, despite Donald Trump’s statement on the crisis last night, says Kyle Rodda of IG:

The day turned pear-shaped after US President Donald Trump’s press conference addressing the White House’s response. Trump didn’t say anything too controversial, and spent most of his breath reassuring his constituents that the crisis, within American borders, is under control, despite the significant rise in cases reported in the US yesterday.

Despite this, and for whatever reason, traders reacted to the press-conference poorly, clearly assuming that the situation in the US will likely deteriorate from here.

Jasper Lawler of London Capital Group agrees that the president “failed to alleviate market concerns” during yesterday’s press conference on the coronavirus.

The main takeaway was that the virus will “probably spread in the US”....

We think the next ‘breaking point’ will be when there is a big cluster of cases in the United States. Former Fed-Chair Yellen acknowledged yesterday that “it’s conceivable that coronavirus pushes US into a recession”.

This is turning into a grim week for the markets, even before Europe opens today.....

European markets set to tumble again

Traders on the floor of the Buenos Aires Stock Exchange, last night
Traders on the floor of the Buenos Aires Stock Exchange, last night Photograph: Agustin Marcarian/Reuters

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Another day, another sell-off! World stock markets are sliding again today, as the coronavirus continues to spread around the world.

Fears of a global pandemic, and a sharp slowdown in economic growth, are raging through the markets -- as investors fear that governments will fail to contain Covid-19.

European stock markets are expected to tumble sharply today, as the wave of selling accelerates.

Britain’s FTSE 100 is being called down another 1.5%, which would send it to a fresh 13-month low. That would also drive the Footsie into correction territory (more than 10% off its recent peak).

European markets are tipped to tumble by another 2%, with the futures market a sea of red again.

Asia-Pacific stocks have already slumped today, with Japan’s Nikkei shedding another 2% and South Korea down 1%. Australia’s S&P/ASX index has lost another 0.75%, as Canberra launches its coronavirus emergency plan.

Overnight, South Korea has reported a further 334 new cases of Covid-19, and China reported 433 new confirmed cases, and 29 deaths. The total death toll is nearly 3,000 people, with more than 82,000 infected.

Last night, Microsoft joined the ranks of firms warning that they’ll miss their financial targets - its personal computing supply chain has been disrupted.

Investors have not been reassured by Donald Trump’s attempts to get a grip on the situation. The US president put his deputy, Mike Pence, in charge of coronavirus response, and insisted America “very, very ready for this”.

In a rare trip to the White House briefing room, Trump declared:

The risk to the American people remains very low. We are ready to adapt and we are ready to do whatever we have to as the disease spreads, if it spreads.

There’s no reason to panic . . . this will end.”

Investors, though, are in a panicky mood. They’ve realised that company profits could be badly hit if firms can’t source products from China, or sell to their usual outlets.

Wall Street failed to rally last night, with the Dow closing lower -- and it could suffer further falls today too.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says traders are also concerned that there are now more cases outside China than inside:

News spurred worries that the coronavirus is becoming a global threat and that containment measures elsewhere could further slowdown the global growth. Some European companies paused their business trips for the coming weeks and earnings forecasts are being pulled lower....

The slide we are seeing right now is not the correction of the recent stock rally, but the market’s understanding that the coronavirus outbreak would translate into significantly lower earnings and an anaemic global growth. If we add the fact that the crisis has only started outside China into the mix, there is a meaningful shift in stock valuations.

We’ll be tracking all the market action through the day....

The agenda

  • 10am GMT: Eurozone economic and consumer confidence figures for February
  • 1.30pm GMT: US durable goods figures for January

Updated

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