MARKET REPORT: Coronavirus crisis wipes £100bn off UK blue chips

Almost £100billion has been wiped off the FTSE 100 in just two days as the number of coronavirus cases surged in Europe.

The FTSE 100 swung to a 12-month low yesterday as the first cases of the disease, known as Covid-19, were recorded in Austria, Switzerland, Croatia and mainland Spain.

It came as more deaths were recorded in Italy – taking the number there to ten – and a hotel in Tenerife was put on lockdown.

The FTSE 100 swung to a 12-month low yesterday as the first cases of the disease, known as Covid-19, were recorded in Austria, Switzerland, Croatia and mainland Spain

Around 80,000 people worldwide have contracted the virus, most of them in China. The death toll is now more than 2,600.

The cases across Europe sent the Footsie 1.9 per cent lower last night, losing 138.95 points, to close at 7017.88. That shaved £35billion off the value of the blue-chip index, adding to a £62billion drop on Monday.

The FTSE 250 followed suit, falling 1.9 per cent, or 401.9 points, to 20,715.97, while European indexes also dipped – with France’s Cac 40 dipping 0.9 per cent. 

In the US, the Dow Jones, S&P 500 and Nasdaq lost between 1.6 per cent and 1.9p.

President Donald Trump tried to shore up support by pitching it as a buying opportunity, saying that the fall was ‘starting to look very good to me!’

Stock Watch – Wey Education 

Business has been going so well at online learning provider Wey Education that it expects revenues to surge beyond £7.5million this year.

This would be a 25 per cent increase on the year before and far ahead of forecasts.

It will plough the extra cash back into the business, which provides a fee-paying online secondary school and tuition services for children with complex needs, and still expects to make the same amount of profit. Shares rose 13.6 per cent, or 2.2p, to 18.35p.

But analysts were unsurprised. IG’s Chris Beauchamp said: ‘The spread of the virus to Europe was always likely to be viewed as a much more worrying event than the broader outbreak in China, since the kind of draconian measures available to the Communist party will be all but impossible to implement in the EU.’

But, he added: ‘The West’s high standard of medical care will act as a powerful firebreak to any outbreaks.’ Under-fire sectors have already racked up heavier losses.

Airlines and travel groups, which will be hit by flight cancellations and recommendations not to travel, were stung, with British Airways-owner IAG falling 2.3 per cent, or 13.2p, to 552.8p and budget airline Easyjet shedding a further 3.5 per cent, or 44p, to close at 1213p.

Cruise operator Carnival, whose ship the Diamond Princess was a coronavirus hotbed, slipped another 5.9 per cent, or 166p, to 2639p, and package holiday provider Tui lost 4.9 per cent, or 37.4p, to 730.2p.

BP (down 2.2 per cent, or 9.55p, to 428.7p) and Royal Dutch Shell (down 2.3 per cent, or 41.8p, to 1780.2p) dragged as oil prices fell another 1.7 per cent to $55 a barrel.

And companies including mid-cap defence group Meggitt and McLaren car engine maker Ricardo were the latest to warn that their performance could be knocked by the virus.

Meggitt fell 5.2 per cent, or 30.6p, to 563.8p, as it said the production halt to Boeing’s 737 Max would also contribute to a £20million hit to profits. Ricardo plunged 8.7 per cent, or 66p, to 694p.

But gold prices hovered around a seven-year high, trading at around $1,649 an ounce, as investors flocked to the safe-haven metal.

Elsewhere, the bank note printer De La Rue surged after it unveiled plans for ‘extensive’ cost cuts as part of a drastic overhaul.

New chief executive Clive Vacher said that the group will aim to cut annual costs by around £35million a year – higher than a previous target of £20million – and is ready to take the plans to its lenders, HSBC, for sign-off.

Shares in the small-cap group, which prints around a third of the world’s bank notes, rocketed 20.8 per cent, or 25.4p, higher to 147.6p.

Oilfield services group Petrofac also climbed, rising 0.5 per cent, or 1.9p, to 360.4p, even though it warns revenues will fall again in 2020.

It said that revenues fell 5 per cent to £4.3billion last year, in a performance that Hargreaves Lansdown analysts have branded ‘no worse than expected’.

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