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(Alliance News) - Stocks in London were sharply lower at midday on Friday, with investors gripped by fears the coronavirus outbreak will wipe out company earnings and push some of the world's biggest economies into recession.
China reported 44 more deaths from the novel coronavirus epidemic on Friday and 327 fresh cases, the lowest daily figure for new infections in more than a month. The death toll now stands at 2,788 in mainland China, according to the National Health Commission.
However, outside of China, the virus is spreading at a faster pace. Nigeria on Friday announced the first confirmed case of the novel coronavirus in sub-Saharan Africa. In the US, a patient contracted the virus with no clue as to where it came from.
The FTSE 100 was down 193.26 points, or 2.8%, at 6,603.14. The large cap index is on track for a weekly decline of 11%, which would be its worst week since the financial crisis of 2008.
The FTSE 250 index was down 537.62 points, or 2.7%, at 19,245.83 at midday and the AIM All-Share index was down 4.2% at 850.08.
The Cboe UK 100 index was down 2.9% at 11,187.22. The Cboe 250 was down 2.9% at 17,324.09, while the Cboe Small Companies was down 3.1% at 11,445.94.
In Paris the CAC 40 was down 3.0%, while the DAX 30 in Frankfurt was down 3.9%.
Analysts at the Share Centre said: "We take the view that 'this selloff is different' and the incessant downward spiral of the market is more reminiscent of the financial crisis than any other bouts of turbulence we've had in the remarkable uptrend over the last ten years. Comparisons to other spreads of disease are difficult; SARS, MERS and Ebola were largely contained in far flung places, Covid-19 has impacted a much bigger Chinese economy than SARS in 2003, Covid-19 seems to spread far more easily and it is here in the West.
"With the markets already down by 11% over a week, those who haven't already sold have obviously made losses and need to reconsider whether selling now is to risk missing out from a future recovery. A recovery will come but it may not necessarily be V shaped but more likely a U shape since the virus in the West is still spreading and we do not know the full economic fallout. However, the longer it takes to get over this crisis the more likely we are to see certain economies who are already weak, go into recession."
On the London Stock Exchange, Rolls-Royce Holdings cut a lonely figure as the only stock in the green on Friday, up 6.7% after the jet engine maker reported annual results which beat market consensus estimates.
Rolls-Royce recorded a pretax loss of GBP891 million for 2019, compared with GBP2.95 billion pretax loss a year ago, on a revenue of GBP16.59 billion and GBP15.73 billion, respectively. The narrowed loss was mainly due to sharply lower net financing costs, which fell 92% year-on-year to GBP178 million.
On an adjusted basis, annual pretax profit totalled GBP583 million for 2019, up 26% from GBP466 million a year ago and from GBP465 million consensus estimates.
Annual underlying operating profit - the company's preferred profit measure - jumped 32% year-on-year to GBP808 million. Consensus estimates saw underlying operating profit at GBP657 million.
Rolls-Royce retained its guidance for fixing Trent 1000 engines and said that it remained on track to reduce aircraft on ground to single digits by the end of the second quarter of 2020.
At the other end of the large cap index, Rightmove was down 4.0% despite reporting strong 2019 results. The property portal delivered 8.0% revenue growth to GBP289.3 million from GBP267.8 million reported a year earlier, beating market consensus of GBP289.1 million.
Rightmove explained that growth was driven by continued improvement in its Agency and New Homes businesses. Average revenue per advertiser was up by GBP83 to GBP1,088 per month.
International Consolidated Airlines Group was down 2.7% after the British Airways parent warned it is currently experiencing demand weakness on Asian and European routes, resulting from the cancellation of industry events and corporate travel restrictions due to corovnavirus.
IAG said it had "good" 2019, despite higher fuel prices hurting its operations during the year. The British Airways parent company reported revenue growth to EUR22.47 billion year-on-year from EUR21.40 billion, but pretax profit fell to EUR2.28 billion from EUR3.49 billion amid higher employee, fuel, engineering and finance costs.
Budget airline easyJet said it has seen "significant" softening of demand and load factors into and out of its northern Italian bases. The stock was flat.
In the FTSE 250, Plus500 was the best performer, up 6.7% after contract-for-difference provider said its first quarter performance to date is substantially ahead of the last quarter of 2019, due to a significant increase in customer trading activity levels.
Plus500 said it is too early to determine how this outperformance will affect 2020 as a whole, as the high levels of market volatility may not continue, as well as the impact of Australian regulatory changes.
The pound was quoted at USD1.2885 at midday, firm against USD1.2867 at the London equities close on Thursday.
The euro stood at USD1.1033 at midday, up from USD1.0984 at the European equities close Thursday.
Against the yen, the dollar was trading at JPY108.20, down from JPY110.58 late Thursday.
Stocks in New York look set to extend the heavy losses incurred on Thursday, as US stock markets entered into correction territory. A stock market correction is widely defined as a 10% fall from its most recent peak.
The Dow Jones Industrial Average on Thursday plunged nearly 1,200 points or 4.4%, to finish at 25,766.64, its worst session in more than two years. The Dow has dropped 13% from its record high of 29,568.57 in mid-February.
The DJIA was called down 0.8%, the S&P 500 index down 0.7% and the Nasdaq Composite down 0.8%.
The losses set Wall Street on pace for its worst week since the 2008 financial crisis, as investors continued to flee equities into safer investments like US Treasuries and the yen.
Brent oil was quoted at USD50.50 a barrel, down from USD51.32 at the London equities close Thursday. The North Sea benchmark fell to an intraday low of USD49.56 in morning trade - slipping below the USD50 mark for the first time since mid-2017.
Gold was quoted at USD1,630.17 an ounce at midday, down from USD1,655.10 at the London equities close Thursday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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