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(Alliance News) -Â The FTSE 100 opened well in the red on Thursday, giving back some of its recent recovery as markets refocus on the troubling spread of Covid-19 across Europe and the US.
Later in the day is a monetary policy decision from the Bank of England, at noon, with traders watching to see if the central bank unveils any further stimulus measures. There also will be focus on the weekly US initial jobless claims figures, with analysts bracing for a surge.
The FTSE 100 index was down 150.28 points, or 2.6%, at 5,537.92 early Thursday. The mid-cap FTSE 250 index was down 209.24 points, or 1.4%, at 14,610.67. The AIM All-Share index was down 0.5% at 658.62.
The Cboe UK 100 index was down 2.0% at 9,360.88. The Cboe 250 was down 0.9% at 12,651.43, and the Cboe Small Companies down 0.1% at 8,023.08.
In mainland Europe, the CAC 40 in Paris was down 2.1% while the DAX 30 in Frankfurt was 2.0% lower early Thursday.
"After a nice recovery over the last few days, investors will be wondering whether the selling is about to resume again in this near market. With a growing number of countries in lockdown and the virus still spreading rapidly in Europe and the US, it is very difficult to be optimistic about the global economic outlook despite all the large monetary and fiscal stimulus measures announced by various governments and central banks over the past couple of weeks," said Fawad Razaqzada, market analyst at TradingCandles.
The US Senate unanimously passed the nation's largest-ever rescue package late Wednesday, a USD2 trillion lifeline to suffering Americans, critically depleted hospitals and an economy all ravaged by a rapidly spreading coronavirus crisis.
The monster package, thrashed out among Republicans, Democrats and the White House, provides direct cash payments to millions of hurting American taxpayers, amounting to USD3,400 for an average American family of four. It provides some USD500 billion in grants and loans to small businesses and core industries, including as much as USD50 billion for strained airlines and their employees.
As the number of confirmed cases worldwide soared past 450,000, UN Secretary General Antonio Guterres warned that only a concerted global effort could stop the spread of the virus. A total of more than 20,800 deaths have now been reported in 182 countries and territories, according to an AFP tally.
The G20 major economies will hold an emergency videoconference on Thursday to discuss a global response to the crisis, as will the 27 leaders of the EU.
Elsewhere, the economic events calendar on Thursday has US GDP readings at 1230 GMT. At the same time are initial jobless claims, with FXStreet saying market consensus expects weekly claims to surge to 1.0 million from 281,000.
"The magnitude of claims today will be an indication of how extensive the damage to the US economy is amid business closures for coronavirus. Make no mistake, this could hit risk sentiment across the globe," said Fiona Cincotta at City Index.
There will be an interest rate decision from the Bank of England at midday in London, alongside the release of minutes from this week's meeting, as well as accounts of the emergency meeting last week, at which the UK central bank voted to cut interest rates to a record low of 0.1%.
"The Bank of England is expected to stay pat at today's monetary policy meeting after British policymakers slashed interest rates to the historical low of 0.10% and increased its asset purchases program by 200-billion pound at an emergency gathering earlier this month. But we expect the BoE to maintain an ultra-dovish policy stance given that the UK's economy is expected to shrink by 10% in the first half of this year," said Ipek Ozkardeskaya at Swissquote.
Sterling was quoted at USD1.1910 early Thursday ahead of the BoE, higher than USD1.1764 at the London equities close on Wednesday.
And already out, UK retail sales disappointed in February, with some retailers reporting a knock from rain and others suggesting reduced orders shipped from China due to the Covid-19 pandemic, which started there and shuttered factories.
Sales were flat year-on-year in February after a 0.9% rise in January, the latest reading missing expectations for growth of 0.8%, according to FXStreet. February's was the lowest annual growth rate since March 2013, the Office for National Statistics said.
Month-on-month, sales were down 0.3% after a 1.1% rise in January, again missing expectations for a 0.2% increase. The ONS said a range of retailers reported on the damage to sales fro the extreme rainfall.
Elsewhere in forex, the euro traded at USD1.0928 early Thursday, up from USD1.0834 late Wednesday. Against the yen, the dollar was quoted at JPY110.40, firm on JPY111.60.
In Asia on Thursday, the Nikkei 225 index closed down 4.5%.
Market sentiment in Japan deteriorated after Tokyo Governor Yuriko Koike on Wednesday urged residents to stay home this weekend, warning of a possible "explosion" of the coronavirus after a record 41 new cases were recorded.
Koike said the Japanese capital, so far spared the draconian measures seen in other major global cities, was at a "critical stage" in containing the virus that has confined one third of the planet to their homes.
"Koike's remarks threw cold water on investors," Daiwa Securities chief technical analyst Eiji Kinouchi told AFP.
In China, the Shanghai Composite ended down 0.6%, while the Hang Seng index in Hong Kong closed down 0.7%.
Gold was quoted at USD1,603.33 an ounce early Thursday, lower than USD1,607.66 on Wednesday. Brent oil was trading at USD26.53 a barrel, down from USD27.08 late Wednesday.
London-listed oil majors were lower as the price of Brent softened. Royal Dutch Shell 'A' shares were down 6.3% and 'B' shares down 7.0%, while BP was down 3.8%.
British Land was also among the blue-chip fallers, down 5.6% after deciding to temporarily suspend future dividend payments amid Covid-19 disruption.
"Underlying earnings for the year ending 31 March 2020 are currently expected to be broadly in line with previous expectations; however the independent valuation of our assets as at 31 March 2020 is likely to include a statement from the valuers highlighting the material uncertainty. Until there is clarity on the duration, severity and consequences of this fast-moving situation, the Board is unable to comment further on the outlook," said British Land.
In the FTSE 250, Weir was down 6.0%. The engineer withdrew its 2020 guidance as well as its recommendation to pay a 2019 final dividend.
Trading in January and February was in line with expectations. Through March, however, with a significant reduction in oil prices and the escalation of the Covid-19 pandemic, the backdrop has changed "rapidly".
In Minerals and ESCO, overall aftermarket demand in main mining markets has remained "robust so far", Weir said. March to date has seen a slowdown in original equipment orders, although the longer-term project pipeline remains active.
Oil & Gas has seen North American order activity start to slow as a result of lower oil prices and widespread reductions in spending, the company said.
"We expect to see continued sequential declines in activity through 2020 with E&P capex now expected to be down at least 30% year on year versus our prior expectation of 10%," said Weir.
By Lucy Heming;Â lucyheming@alliancenews.com
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