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Feb 27, 2020

Markets: The FTSE 100 plunges again as Trump fails to reassure investors - business live


Julia Kollewe



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 3.5% this year, up from 3.2% in 2019. That now looks highly unlikely, given the disruption in China.

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.
Alex (@DeGrooteMedia)
#WPP #Advertising #Media #Investing
-Brutal share price action on WPP today, now down at 770p
-Near 10 year low
-Unable to update accurately on #COVID2019
-Paying 60p divi - so yielding 8% right now
-Shd be interesting results meeting pic.twitter.com/NLWqmosDhs
February 27, 2020

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.
Holger Zschaepitz (@Schuldensuehner)
Virus rout continues as the outbreak spreadsto more countries. MSCI Euro down 2%. pic.twitter.com/JuMxzvfWT5
February 27, 2020
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:
Alexandria Ocasio-Cortez (@AOC)
Mike Pence literally does not believe in science.
It is utterly irresponsible to put him in charge of US coronavirus response as the world sits on the cusp of a pandemic.
This decision could cost people their lives. Pence’s past decisions already have. https://t.co/NhMPOusOWm
February 27, 2020

Investing.com (@Investingcom)
🦠Another Ugly Session In Europe As This Week's #Coronavirus-Related Selloff Continues 🦠
-🇪🇺 Stoxx 50 Down 2.6%
-🇪🇺 Stoxx 600 Down 2.4%
-🇩🇪 Germany's DAX Down 2.4%
-🇫🇷 France's CAC Down 2.6%
-🇮🇹 Italy's FTSE MIB Down 2.3%
-🇪🇸 Spain's IBEX Down 2.3%
-🇬🇧 UK's FTSE 100 Down 2.3% pic.twitter.com/kpVvDOjZkx
February 27, 2020

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

Julia Kollewe
Bottle of Antiseptic Dettol liquid disinfectant
Photograph: Alamy
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.....
David Ingles (@DavidInglesTV)
So Asia Pac stocks are now headed for the worst weekly loss in two years and we're not even through with Thursday pic.twitter.com/WA53gEHqh4
February 27, 2020
Holger Zschaepitz (@Schuldensuehner)
Latest Virus rout has wiped out $5tn in global mkt cap, equal to the GDP of Japan. pic.twitter.com/EutkmGnaHx
February 27, 2020

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).
Peter Birks (@peterjbirks)
FTSE 100 looks set to open down about 100 pts in the region of 6900. Trump putting Pence in charge of US response to Covid-19 mysteriously fails to reassure markets.
February 27, 2020
European markets are tipped to tumble by another 2%, with the futures market a sea of red again.
Justin Waite (@SharePickers)
Prepare for another portfolio battering, these are the futures... 🤨 pic.twitter.com/jnmUaod9iQ
February 27, 2020
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.”
Bloomberg Politics (@bpolitics)
President Donald Trump said Americans face little risk from the coronavirus outbreak, seeking to ease public concern after lawmakers raised concern that the government is unprepared. He speaks at a news conference at the White House. https://t.co/zMOK5mVZXK pic.twitter.com/7dNmfN3QyV
February 27, 2020
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.
David Ingles (@DavidInglesTV)
US futures signaling the S&P 500 may open right on top of the level below which US stocks enter a technical correction. Here we go. pic.twitter.com/lEJ8i7d7GR
February 27, 2020
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.

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