There is no respite for financial markets as the
The IMF had predicted global growth of 3.5% this year, up from 3.2% in 2019. That now looks highly unlikely, given the disruption in China.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.
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
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,”
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
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.
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.
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.
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.
Democratic congresswoman Alexandria Ocasio-Cortez also expressed deep concerns last night: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
coronaviruswas arguably the tipping point for investors.
unseriouschoice bya 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.
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.
This fresh wave of selling has wiped another 2%
The consumer sector is leading the rout, followed by energy stocks, tech firms, financial companies, industrial stocks and miners (so most of the
In London, budget airline
Cruise firm Carnival
Today’s slump means the index is more than 10% below its recent peak, of 7674 points set on January 17th.
FTSE tumbles again
The blue-chip index has shed another 153 points to 6,887. That means it has plunged by 7% this week, as
Roughly £38bn has been wiped off the index this morning, on top of the £97bn lost on Monday and Tuesday.
Reckitt: strong demand for sprays and disinfectant
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 weare seeing some disruption to offline retailers, distribution channels and the supply chain connected to China.”
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.
Jasper Lawler of London Capital Group agrees that the president “failed to alleviate market concerns” during yesterday’s press conference on theDespite 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.
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
coronaviruspushes US into a recession”.
European markets set to tumble again
Another day, another sell-off! World stock markets are sliding again today, as the
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%
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
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
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.
Investors, though, are in a panicky mood. They’veThere’s no reason to panic
.. . thiswill end.”
Wall Street failed to rally last night, with the Dow closing lower -- and it could suffer further falls today too.
News spurred worries that the
The slide we are seeing right now is not the correction of the recent stock rally, but the market’s understanding that the
coronavirusoutbreak would translate into significantly lower earnings and an anaemicglobal 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.