Graeme Wearden 

FTSE 100 hits one-year closing low, as Wall Street slides again – as it happened

European markets have suffered a second day of heavy losses as new coronavirus cases are reported
  
  

The City of London.
The City of London. Photograph: Alberto Pezzali/AP

Finally, here’s our news story on today stock market turmoil:

And our main liveblog on the coronavirus crisis is here:

Goodnight! GW

Jennifer Ellison, principal at B|O|S in San Francisco, told MarketWatch that the markets are in “one of those spirals,”

“Obviously, the story is about the spread of the coronavirus that’s spooked investors. Investors don’t know how bad it will get.”

Tech stocks had a bad day, with Apple losing over 3%.

Investors are very concerned that global supply chains are going to be badly hurt by Covid-19, if China’s manufacturing doesn’t return to normality soon.

I think the Dow has just posted its fourth-biggest points drop ever.

So, following the 1,000+ point slump yesterday, it’s clearly suffered its biggest two-day points decline ever.

But.. in percentage terms (which are more important), this week’s slump is less serious. Still serious, though - nearly 7% in two days!

Here’s a handy explanation of today’s market mayhem, from Kyle Rodda of IG:

Global financial markets remain in a frenzy, as market participants price-in a potential global spread of the coronavirus. The latest volatility comes after the US Centre for Disease Control and Prevention warned US citizens to prepare for an “inevitable” outbreak of the coronavirus within the United States. The heightened vigilance in the US comes as countries such as Iran, Italy and South Korea announced yesterday another jump in the number of reported cases of the coronavirus.

Volatility climbs further, as coronavirus reality hits: Market participants are becoming resigned to the fact that the economic slowdown caused by the coronavirus may extend longer than previously anticipated. The heightened level of uncertainty saw the US VIX spike to fresh 14 month-highs, to trade above the 28 level overnight. US stocks took another plunge as a result, with the S&P500 shedding around 3 per cent on Tuesday, paced by major falls in industrial, energy and materials stocks. The spill takes the S&P500’s losses for the week to just shy of 7 per cent.

Dow closes 879 points down

Newsflash: Wall Street has suffered its second day of heavy losses.

The Dow has just closed, down 3.15%. That is a loss of 879 points, to 27,081, on top of the 1,000 shed in yesterday’s rout.

Investors are clearly very worried about the latest jump in Covid-19 cases, including in Europe, and afraid there’s lots more to come.

Wall Street is staggering to the finishing line, after a torrid session.

With 10 minutes left, the Dow is 789 points down at 27,171 (-2.82%), having been over 900 points south a few minutes earlier.,...

The oil price has also fallen sharply today, hitting a two-week low.

Again, that reflects fears of a global slowdown.

Marketwatch has the details:

West Texas Intermediate crude for April delivery fell $1.53, or 3%, to settle at $49.90 a barrel on the New York Mercantile Exchange, for the lowest front-month contract finish since Feb. 10, according to Dow Jones Market Data.

April Brent crude dropped $1.35, or 2.4%, to end at $54.95 a barrel on ICE Futures Europe. That was the lowest settlement since Feb. 11.

Updated

Crumbs... with just ninety minutes to go, the Dow is flirting with its second quadruple-digit plunge in a row.

It’s now down 900 points.

Every Dow sector is in the red

The worst-performing sectors in New York today are mining companies, industrial companies, banks and energy firms.

They all suffer when investors worry that the global economy is stumbling, meaning less demand for iron ore, oil and manufactured foods -- and higher debt defaults.

.....Make that down 3%!

The Dow is now down 821 points this session, as the selloff intensifies dramatically.

The US stock market is down 2.5% since Donald Trump tweeted that it was “starting to look very good to me!”

A fresh wave of selling has knocked the Dow down by almost 700 points, or 2.5%, to 27,270.

That’s its lowest level of 2020, and on track for its lowest close since the start of November last year.

Despite Kudlow’s best efforts, the Dow is now down 621 points today - knocking another 2.2% off the index.

Ludlow tries to calm panic over coronavirus

The White House has sent Larry Kudlow, head of the National Economic Council, into action to calm the market rout.

Kudlow has tried his best, telling CNBC that the US economy is “holding up nicely”.

He declared:

“We have contained this. I won’t say [it’s] air-tight, but it’s pretty close to air-tight,”

Kudlow added that while Covid-19 is a “human tragedy,” it will probably also not be an “economic tragedy.”

“There will be some stumbles. We’re looking at numbers; it’s a little iffy,”

But at the moment, the numbers that we’re looking at ... there’s no supply disruptions out there yet.”

But.... arguably it’s too early to see the impact of the recent disruption in the economic data (certainly the ‘hard’ data that policymakers rely on).

Also, the key to this crisis is government response. U.S. Senator Richard Blumenthal of Connecticut says the US is falling short here:

Ouch! The Dow is now down 2% today, having lost 579 points to trade at 27,381.

American Express is the biggest faller, down over 4%, followed by chemicals firm Dow (3.8%), Visa (-3.6%) and Cisco (-3.3%).

Here’s the message that sent Wall Street sliding again today:

While stocks are slumping again, Wall Street’s fear index is rising.

The VIX index, which tracks volatility, has jumped by over 8% today:

Newsflash: US government bond prices have just hit a record high, as investors dash for safety.

This has driven the yield, or interest rate, on 10-year Treasury bills down to just 1.32%, its lowest ever level.

That indicates a lot of nervousness about US growth prospects in the face of the coronavirus threat. It also shows that investors who have been selling shares today are putting the money into safer assets (and US government bonds are as safe as it gets).

Wall Street selloff deepens after coronavirus warning

Back in New York, stocks are hitting fresh lows as Americans are warned to prepare for Covid-19.

The Dow Jones industrial average is now down 522.51 points, or 1.87%, in a fresh bout of anxious selling.

The slide comes as America’s Centers for Disease Control and Prevention (CDC) said people should prepare for COVID-19 to spread in their communities, following a jump in cases abroad.

Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, warned:

“We really want to prepare the American public for the possibility that their lives will be disrupted because of this pandemic”

Sam Tombs of Pantheon Economics reckons the UK economy is less vulnerable to the coronavirus crisis than other countries, for several reasons including:

  • Ample spare industrial capacity means manufacturing output can recover quickly after disruptions fade.
  • U.K. tourists’ spending abroad exceeds overseas tourists’ spending in Britain by 50%; less flying can lift GDP.
  • We see no sign yet that U.K. consumers are altering their behaviour in surveys or online search data.

JP Morgan’s Jamie Dimon has, it seems, found a reason to be cheerful about coronavirus:

The World Economic Forum would certainly be a good place for Covid-19 to spread -- as thousands of attendees cram into its congress centre (and the parties outside).

However.... WEF wrapped up a month ago, so attendees would surely have been struck down by now.

The Financial Times have done a good piece about the fall in junk bond prices -- which is another sign that investors are very worried.

Here’s a flavour:

Fears over the impact of the coronavirus outbreak sparked a sharp sell-off in junk bonds on Monday, pushing borrowing costs for the riskiest energy companies to their highest level in more than three years.

The additional yield, or spread, on a widely watched high-yield energy bond index run by Ice Data Services rose to 8.35 percentage points above benchmark US Treasuries, its highest level since August 2016, as investors reacted to news that the virus had spread further in countries from Italy to Iran.

It marked the biggest one-day rise in borrowing costs for these riskier energy companies since an intense bout of selling in early 2016, when surging oil supply undercut prices.

“It’s one of the worst trading days we have seen in recent memory,” said John McClain, a portfolio manager at Diamond Hill Capital Management. “It’s a sanity check for investors. We had the melt-up in December and people have been ignoring the tell-tale warning signs this year.

Every European stock market has suffered heavy losses again today.

Switzerland was one of the worst hit, after it recorded its first coronavirus case today.

Banks and utilities performed particularly badly, in a session in which every sector fell.

Here’s the closing prices:

  • FTSE 100: down 138 points, or 1.95%, at 7,017
  • German DAX: down 244 points or 1.9% at 12,790
  • French CAC: down 112 points or 1.9% at 5,679
  • Italian FTSE MIB: down 336 points or 1.4% at 23,090
  • Swiss SMI: down 234 points or 2.2% at 10,478
  • Spanish IBEX: down 232 points or 2.45% at 9,250

£35bn wiped off FTSE 100 today

I’ve just double-checked...and indeed, almost £35bn was wiped off the FTSE 100 today.

That means the index has shed £97bn this week already.

Updated

FTSE 100 hits one-year closing low

Newsflash: Britain’s FTSE 100 index of top shares has ended the day at its lowest closing level in a year.

The Footsie has closed at 7017 points, down 138 points or 1.94% today. That’s on top of the 247 points shed on Monday.

This is the lowest closing point since February 2019, (although the FTSE 100 did briefly dip lower last October).

Nearly every share fell today -- here are the biggest fallers.

By my maths, this wipes around £34bn off the index -- on top of the £62bn shed yesterday.

David Madden , analyst at CMC Markets, says coronavirus fears drove markets down:

The colossal losses that were racked up yesterday encouraged some bargain hunting at the start of today’s session, but that old concerns crept in, hence why we are offside again. The coronavirus fears have gripped European stocks as dealers are worried that this part of the world could go down the Wuhan route in terms of being on lockdown.

Yesterday, Europe-focused airlines like easyJet and Ryanair posted painful losses, and they are in the red again today, and that tells you everything you need to know about tourism sentiment.

Jefferies: Brace for US outbreak that will rattle markets.

How bad could coronavirus, and the market selloff, get?

Well..... Simon Powell of investment bank Jefferies fears that the latest cases in South Korea, Italy and Iran point to the risk of a global pandemic.

Powell suspects that there are more cases in America than officially reported. And given movement of Chinese, Korean and Iranian nationals into the US, we could soon see an outbreak there that “significantly” rattles markets.

Powell writes that US hospitals could be “swamped with acute cases” - especially as it will be extremely hard to lockdown an American city.

Originally, doctors in the US were advised not to test people unless they had been to China or had contact with someone who had been diagnosed with the disease. Within the past two weeks, the CDC said it would start to use the national flu surveillance tracking infrastructure to test patients who have flu symptoms for COVID-19 in five cities across the US. But elsewhere, tests are still not widely available. Recently, the Association of Public Health Laboratories said that only California, Nebraska, and Illinois had the capacity to test people for the virus. Compare this with Singapore and S. Korea, which have carried out significant testing. High case complication rates could swamp medical systems - According to recent studies we have seen from Wuhan, the case-complication rate (number of cases requiring ICU level of care) could be between 5-10%, suggesting that if there is a global break out, we could see hospitals swamped with acute cases.

Our analysis of the WHO’s published criteria for assessing if this is a pandemic shows these have been met already. What might an outbreak in the USA do to markets? - Imagine trying to quarantine a large city in the USA for a month, similar to how the Chinese have shut down Wuhan, or the way the Italians are trying to ring-fence 10 towns near Milan. Our working hypothesis is that it wouldn’t work, and could cause panic on a scale that would spook markets.

Our base case hypothesis is that a Trump government is unlikely to choose reduced economic activity, and supply chain disruption, so spread of the virus, if it were to emerge in the US, would be more likely.

Stocks are really on the slide in New York.

The Dow has lost another 1.3%, or 374 points, on top of the 1,000 shed on Monday.

Sentiment is shifting fast, in the face of more coronavirus infections.

Nearly every share on the FTSE 100 is down today, as fears of a Covid-19 pandemic ripple through the City again.

This latest selloff comes as new coronavirus cases are reported in Switzerland, Austria and Croatia.....

As things stand, the FTSE 100 index is on track to lose roughly another £30bn today, on top of the £62bn shed yesterday.

Every sector is down, led by consumer cyclicals (-2%), telecoms (-2%), energy (-2%), utilities (-1.9%) and banks (-1.9%).

Market sell-off accelerates

It’s turning into another rout!

Britain’s FTSE 100 index is now down another 130 points, or 1.7%, at 7030, as we enter the final hour of trading.

That’s still a four-month low on an intraday basis, but would be the lowest closing level in a year.

Cruise operator Carnival is now down 5.7%, on fears that tourism will be badly hurt by the coronavirus, followed by Meggitt (which cited the virus as a threat this morning).

Wall Street has fallen into the red too -- with the Dow down 168 points at 27,792. That early recovery is but a memory.....

Wall Street’s rally is running out of gas - just like Europe’s short-lived ‘recovery’ this morning.

The S&P 500 and the Dow are now flat, quickly losing their early 0.5% bounce from 45 minutes ago.

That’s hit sentiment in Europe, where stocks are falling further.

In London, the FTSE 100 is now down 85 points, or 1.2%, at 7,071 points - a new four-month low.

Coronavirus could wipe out $40bn of luxury sales

Luxury goods firms are expecting to lose tens of billions of pounds of sales because of the crisis.

A survey of top chief executives and finance officers estimated the industry could lose €30 billion to €40 billion in sales this year, for an estimated total sales of €309 billion in 2020.

Some of this is products that would have been shipped to China (where many stores are still closed). But it also covers potential sales lost because tourists from China, and beyond, will be staying home this year.

That would mean a 15% drop in earnings for the industry, or around €10bn.

Quartz has more details:

The main concern is business in China, where sales are plummeting due to widespread store closures and shoppers hunkering down in their homes. The survey estimates as many as 10 million to 15 million products originally destined for China could go unsold, forcing companies to redirect those items to other parts of the world. Luxe outerwear company Moncler, for instance, said on a recent earnings call with investors and analysts that it had frozen shipments to Greater China and sent them instead to regions such as Europe.

But there’s also worry over a worldwide impact. Chinese tourists are big spenders on luxury goods and contribute to sales in cities from Tokyo to New York. Many have put off flying or face travel restrictions. In Paris, retailers have noticed a marked decline in shopping Chinese travelers.

Just in: US consumer confidence has risen, but isn’t actually as strong as expected.

The Conference Board’s index of consumer morale has come in at 130.7, rather weaker than the 132 which economists expected.

That’s still a rise, though, because January’s report has been revised down to 130.4 from 131.6.

Consumers reported that their current economic situation had worsened, but they’re optimistic about future prospects. Or at least they were! This survey took place before the virus escalated in recent days.

In other data news: US house price inflation picked up in December, with prices rising by 3.8% over the last year.

Updated

The coronavirus could trigger recessions across the global economy unless it is contained soon, fears Dr. Kerstin Braun, president of Stenn Group (which provides trade finance).

We already know from our own research that half of firms in the UK and US (46% and 45% respectively) predict a recession in 2020, while a further third (37% and 35%) predict a global recession this year. These predictions could very much become a reality if the virus isn’t contained and every week we’re seeing news of another countries’ GDP hit. Tourism dependent countries, particularly those in Asia such as Thailand, Malaysia and Cambodia could be worst affected, after bookings have dried up from the globe-trotting Chinese who account for over 15% of the world’s tourism spending.

She warns that outbreak also threatens to harm global trade, and badly jolt the auto industry.

US imports are being held hostage at the ports when coming in via ship. Vessels need to wait 14 days until they are able to access the port and offload, slowing down US imports. For China, where the outbreak first began, the virus could topple China’s dominant manufacturing position and companies will need to diversifying their supply chains. This could lead to more balanced global trade relationships, particularly if emerging manufacturing countries such as Vietnam are about to capitalise on the opportunity. We know Chinese GDP in the first and second quarter will be impacted by the effects of the Coronavirus and its likely supply chains will move to Vietnam. We’ll also see more advanced goods such as tech going to India, and more apparel going to Bangladesh.

“The automotive industry will also be affected by the Coronavirus. Supply chains are slowing down in China as manufacturing is not at its full capacity. Factories are opening back up but with only about 50% of the workforce. Given the automotive industry is already struggling to adopt to the lower and changing demand for cars, particularly as more people are opting for electronic vehicles, the Coronavirus is likely the automotive industry could be soon hit.”

Tesco: 1,800 bakery jobs at risk

Breaking away from coronavirus.... more than 1,800 jobs are at risk at supermarket chain Tesco, as it shakes up its bakeries operations.

The Press Association has the details:

Tesco is to slash more than 1,800 jobs as part of changes to bakeries in its large supermarkets.

The retailer said 1,816 bakery staff are at risk of redundancy as part of the overhaul, which will take place from May.

Tesco said it will convert 58 of its bakeries to be able to finish off pre-baked products in-store, and 201 sites will only bake some of its most popular items from scratch.

It said the move, which will also see bakeries at another 257 sites remain unchanged, means it will need fewer staff members.

Jason Tarry, Tesco’s UK and ROI chief executive, said: “We need to adapt to changing customer demand and tastes for bakery products so that we continue to offer customers a market-leading bakery range in store.

“We know this will be very difficult for colleagues who are impacted, and our priority is to support them through this process. We hope that many will choose to stay with us in alternative roles.”

Tesco said it will look to find other jobs for the staff, with “thousands of store vacancies” expected to be available across its network between now and May.

Shares in US biotech firm Moderna have surged by 20% in early trading in New York.

Last night, the Boston-based firm became the first company to release a potential coronavirus vaccine, which it has sent to the US National Institutes of Health to be tested in humans.

That doesn’t mean the vaccine is ready to be released, of course -- but it’s an important step forward.

Cambridge biotech.

Wall Street opens higher after Monday's plunge

DING DING! The opening bell is ringing on Wall Street, as traders return to their desks after Monday’s whopping selloff.

And the early moves are up.

Shares are staging a small recovery after the Dow’s 1,000 point plunge yesterday, with technology stocks among the risers.

  • Dow Jones industrial average: up 155 points or 0.5% at 28,116
  • S&P 500: up 18 points or 0.5% at 3,244
  • Nasdaq: up 84.9 points or 0.9% at 9,306

So, a small recovery... can it last?

Upscale American department store chain Macy’s is starting to feel the impact of coronavirus.

After reporting results today, the company said it expects a “small impact” on sales in the current quarter, due to lower tourism levels.

This is “nothing to be concerned about yet”, Macy’s insisted, but it also cautioned that the situation is still “unfolding”.

US shoe vendor Wolverine World Wide has warned that the coronavirus will hurt its profitability, by disrupting its supply chain and cutting sales.

Wolverine, whose brands include Hush Puppies, Merrell and Bates, predicts that Covid-19 will knock $30m off its revenues in the first half this year.

That will also reduce profits by around 4%, or 10 cents per share, to around $2.20 per share.

It says:

In recent years, the Company has diversified its supply chain away from China and in 2020, China is expected to represent less than 20% of its global production, down from approximately 40% in fiscal 2019.

The Company is continuing to monitor and adjust to the fluid coronavirus situation, and recognizes that there could be additional future impact to the global supply chain or customer demand.

Updated

The coronavirus is having a painful impact on Italy, forcing several towns to lock down.

The Italian economy was already on the brink of recession, and financial analyst Kathleen Brooks of Minerva fears it could be driven in to a deep crisis:

Updated

The coronavirus crisis is also causing ructions in the bond market.

The cost of insuring junk-rated company debt has hit its highest level since October, Bloomber’s Katie Linsell points out. That reflects concerns that a pandemic could leave some firms unable to repay their debts.

After another tough morning, 87 of the 100 companies on the FTSE 100 are in the red as lunchtime approaches.

Neil MacKinnon, Global Macro Strategist at VTB Capital, says investors are right to be very worried:

“The fact of the matter is that the virus has spread outside of China and is present in the major economies. China is still in lockdown and the economy is 50% operative, according to estimates from Bloomberg.

Once travel restrictions inside China are lifted there is a risk of the virus increasing again and/or a reluctance of people to return to work. This looks like more of an ‘L-shaped recovery’ as far as the Chinese economy is concerned and full-capacity working is unlikely to happen before the third quarter.

The ramifications are certainly global, given that China has accounted for a third of global GDP growth over the past decade. The disruption to global supply chains and disruption to trade and investment flows is considerable.”

FTSE 100 slides to four-month low

Newsflash! Britain’s FTSE 100 has hit a new four-month low, as markets slide again.

The blue-chip index is now down 55 points at 7100, an 0.8% drop. That’s its lowest level since 4th October, adding to the 247 points lost yesterday.

Engineering firm Meggitt and chemicals group Croda are the top fallers, down 4.4% and 3.2% respectively, after they warned that the coronavirus will hurt their businesses this year (as reported earlier).

The travel industry is also sliding again, with TUI down 3% and easyJet down 2%

Stocks are under pressure across Europe too, in the face of the latest cases in Iran, Italy and the Canaries. The Stoxx 600 index has lost another 1%, on top of its 3.3% fall on Monday.

David Madden of CMC Markets says investors are fretting about a global Covid-19 pandemic:

Equity markets in Europe enjoyed a rebound in early trading in the wake of yesterday’s bloodbath of a session, but the positive move was short-lived. The brutal losses endured yesterday coaxed a few buyers out of the woodwork, but given that equity benchmarks are back in the red suggests that sentiment is still sour.

The coronavirus crisis in Italy remains at the forefront of traders’ minds. Dealers are fearful the health emergency will spread within Italy, and beyond its borders. Investment sentiment is fragile as there is the possibility of major disruption across Europe, so traders aren’t taking any chances.

Hopes of a recovery on Wall Street have fizzled out too....

Hong Kong has posted some shockingly bad trade data today, which show that its economy is sinking deeper into recession.

Hong Kong’s exports plummeted the most in more than a decade in January, down 22.7% year-on year. Imports dropped by 16.4%, their 14th monthly decline in a row.

Hong Kong’s economy was already shrinking, following the long pro-democracy protests last year. The coronavirus crisis is dealing another blow to its tourism sector, forcing shops to close.

Stephen Innes of AxiCorp says:

If this is a foreshadow of things to come, I think investors across the globe will need to fasten in as things could get incredulously worse before improving

Trump: Markets will crash if I lose

Donald Trump then claimed that the stock markets would hit fresh heights if he were elected, but tumble if he loses in November.

The US stock market has gained over 40% since Trump’s shock win in 2016, and there probably is some nervousness on Wall Street about Elizabeth Warren or Bernie Sanders clamping down on the financial sector.

This week’s jitters, though, are definitely virus-related..

Updated

Just in: Donald Trump is discussing yesterday’s market tumble, on his trip to New Delhi.

The stock markets don’t appear to share Donald Trump’s view that the coronavirus is under control, says Pierre Veyret, technical analyst at ActivTrades.

He writes:

Investors remain stuck between their appetite for risk and the blurry impact of coronavirus which is leading to mixed market sentiment this week. President Trump tried to reassure investors by saying the US economy was still sound, robust and not yet impacted by the deadly virus.

These words were also underlined by NEC Director Kudlow who even said investors should “seriously considering buying the dip”. However, these words were not enough for most investors who are already fearing, if not a direct, at least an indirect impact on US imports/exports in the coming days or weeks.

The White House is facing heavy criticism for not reacting faster to Covid-19, but has now requested $2.5bn in emergency funding.

Last night, Donald Trump tweeted that the stock market was looking ‘very good’ -- effectively encouraging Americans to buy shares following the Dow’s 1,000-point dive.

Updated

European markets all in the red

European stock markets are now all in the red again, as coronavirus fears rear up again.

In another worrying development, authorities in Tenerife are testing hundreds of tourists after a visitor fell ill at a Canary Islands hotel.

With Iran reporting two more deaths from Covid-19 a moment ago, and that latest case in Italy, traders are ditching equities again.

Here’s the damage:

  • FTSE 100: Down 36 points or 0.5% at 7129
  • German DAX: Dow 46 points or 0.33% at 12,988
  • French CAC: down 24 points or 0.4% at 5,767
  • Italian FTSE MIB: down 147 points or 0.6% at 23,277
  • Spanish IBEX: down 69 points or 0.7% at 9,414

Today’s flurry of corporate warnings highlights the damage that a Covid-19 pandemic would have on the global economy -- both on supply chains and on customer demand.

Olivier Blanchard, a former chief economist at the International Monetary Fund, fears that governments will struggle to cushion this blow:

European stocks are under pressure again, because Italian authorities have just announced the first positive coronavirus case in the South of Italy.

A woman from Bergamo, who was on holiday with her friends in Sicily, has tested positive for Covid-19. The patient, who is not in serious conditions, has been transferred to the Hospital Cervello in Palermo, our Coronavirus liveblog reports....

Three more people have died from the virus in Iran (taking the total to 15), and there are almost 1,000 cases in South Korea.

This bad news is weighing on the markets, with cruise operator Carnival and holiday operator TUI both down 2%, among the big fallers in London. The UK, Italian and Spanish markets are all in the red again.

Josh Mahony, senior market analyst at IG, explains:

What was largely a Chinese issue to resolve has soon become an international problem, with European eyes transfixed on Italian efforts to curb the spread of the virus. With European borders open and the Italian ‘patient zero’ still unknown, things could easily turn from bad to worse in the efforts to keep the coronavirus at bay.

With tourism to and from China plummeting, there is little reason to expect any different in Europe if this virus spreads throughout the continent. The declines seen for largely European-focused airlines such as easyJet and Ryanair highlight the increasing fear that we will see travel locked down closer to home, with obvious knock-on implications for consumer activity should that occur

The rally has fizzled out!

Britain’s FTSE 100 has dropped back to yesterday’s two-month closing low of 7163 points, and the Stoxx 600 index is slightly negative.

Updated

Another specialist UK manufacturer, Morgan Advanced Materials, also expects to lose millions of pounds due to Covid-19.

Morgan makes heat-resistant products such as thermal ceramics, crucibles and high-tech seals for use in extreme temperatures and corrosive environments.

It has has been forced to suspend work at a Chinese factory since the coronavirus outbreak began. It also expects to keep a plant in northern Italy closed for the next two weeks.

This will dent Morgan’s output - and thus revenues and profits -- as Reuters explains:

Industrial materials maker Morgan Advanced Materials has closed its manufacturing facilities in China because of the coronavirus outbreak and expects a hit to 2020 revenue and headline operating profit as a result, the company said on Tuesday.

The British company, which generates around 10% of its revenue from China, said the outbreak will take around £3.5m ($4.5m) off its headline operating profit and about £7m pounds off its revenue in 2020.

Morgan made operating profits of £134m last year, so this is a small but noticeable hit.

Engineering firm Ricardo's coronavirus profits warning

UK engineering and consulting firm Ricardo has issued a profit warning, due to the coronavirus.

Ricardo, which focuses on the transport, energy and scarce resources sectors, has told investors that full-year earnings will suffer a ‘material’ hit because of the Coronavirus’ disruptive impact on its China auto and rail operations.

Ricardo, which has nine offices and technical centres in China, says business development, project delivery and client engagement have all suffered from the crisis.

It says:

As we start the second half of the year, we have seen increased headwinds in the automotive sector which we anticipate will lead to suppressed order intake in our US, EMEA and China Automotive businesses.

The Coronavirus outbreak...has already had an operationally disruptive impact on our Automotive and Rail operations in China and we anticipate continuing disruption to client engagement, project delivery and business development in the coming months in mainland China and surrounding countries. Based on the issues highlighted above we are anticipating material impact to our forecast second half profits and thus full year

European stock markets have opened a little higher after Monday’s rout, but it looks very fragile.

The EU-wide Stoxx 600 index is up 0.5% this morning, having tumbled 3% yesterday. Germany’s DAX and France’s CAC are up around 0.6%.

However the Italian FTSE MIB is continuing to fall, down another 0.5%, after it reported 7 coronavirus deaths and over 200 infections.

The number of cases of Covid-19 worldwide has now hit 80,000 - our main liveblog on the crisis has all the details:

Chemicals firm Croda: Covid-19 could disrupt operations

UK specialist chemicals firm Croda has also told the City that the coronavirus crisis could hurt its business.

FTSE 100-listed Croda has five offices in China, in Shanghai, Guangzhou, Beijing, Hong Kong and Taipei, so has suffered some disruption from the restrictions enforced by Beijing.

It told shareholders this morning:

At this time, to the best of our knowledge, no Croda employees have been infected by the virus. Our sales offices have reopened, as have our two production units, albeit with more limited operations than usual. China represents 6% of Croda’s Core Business sales, 2% of Group production and a limited component of our raw material supply chain.

However, there is potential for some disruption to customer and consumer demand. We will continue to monitor the impact.

Shares in Croda are down 1.5%, after it also cautioned that demand in industrial markets is expected to remain weak but stable.

Meggitt: Coronavirus will hurt profit growth

Shares in UK engineering firm Meggitt have fallen by 4.5% at the start of trading, after it warned that the coronavirus crisis will hit its growth.

Meggitt, which makes components for the aerospace, defence and energy markets, told shareholders that its key markets will suffer from the spread of Covid-19.

It told the City that organic revenue growth will slow this year, explaining:

Sector specific factors including the production halt of the 737 MAX and supply chain disruption, as well as the wider macroeconomic impact of COVID-19 are expected to hold back margin progression in the short-term.

Meggitt added that air travel grow is likely to be curtailed by the virus (as industry body IATA warned last week), and that global supply chains will probably suffer from a production backlog due to Chinese factories being closed.

This has pushed the company’s shares to the bottom of the FTSE 100 leaderboard, down 27p at 567p.

Updated

European markets struggle back after Dow's plunge

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

Investors around the globe are reeling from the worst day in two years, as anxiety over the coronavirus crisis hit fever pitch.

Stocks tumbled across the globe on Monday, with America’s Dow Jones shedding more than 1,000 points by the close. That’s its third biggest points decline ever, as technology companies, energy providers and mining firms bore the brunt.

The corporate cost of the crisis is mounting too. Overnight, Mastercard cut its financial outlook due to the outbreak and United Airlines withdrew its full-year 2020 guidance.

Japan’s stock markets has suffered heavy losses overnight, as traders catch up with events after a holiday on Monday. The Nikkei index has fallen by 3.34%, or 781 points, to 22,605 in a spate of nervy selling.

Australia’s S&P/ASX index has fallen again today, losing another 1.6%.

European stocks also shed over 3% yesterday, with the Italian FTSE MIB sliding by over 5% after a spate of coronavirus deaths in Italy.

Fears of a pandemic, with massive implications on global supply chains and world economic growth, are rife.

But after very heavy losses across the board yesterday, we may see a small recovery in European stock markets today. Britain’s FTSE 100 has just opened 30 points higher, at 7,186.

That’s only a teensy recovery, mind, as it plunged by 247 points during Monday’s rout.

Investors are glued to the latest reports of infection levels, with the global death toll now over 2,600.

So there’s little chance of the markets calming down soon, argues Michael Hewson of CMC Markets.

There is no question financial markets are coming round to the realisation that this particular crisis is likely to have a slightly longer shelf life than many thought was the case a couple of weeks ago, however flu outbreaks are hardly anything new. They happen every year and according to the World Health Organisation flu kills up to 650,000 a year, yet markets are reacting to an outbreak that has so far only affected a fraction of that number.

That is not to downplay the seriousness of the coronavirus outbreak, given how little we know about it, but it could be argued that the reaction of governments to the outbreak in closing borders and restricting movement is actually making things worse, as well as sowing confusion and fear amongst their populations.

For now, there appears little prospect that financial markets look likely to settle down in the short term, which means investors will have to get used to an extended period of uncertainty and volatility.

The agenda

  • 11am GMT: CBI’s index of UK retail sales: expected to rise to 4, from 0 in January
  • 2pm GMT: The S&P/Case-Shiller index of US house prices
  • 3pm GMT: US consumer confidence survey for February: expected to rise to 132, from 131.6
 

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