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(Alliance News) - Stocks in London ended sharply lower on Wednesday as plans to bail out embattled industries failed to calm investor fears about the devastating economic damage from the coronavirus.
On Tuesday, all 50 US states had confirmed cases of Covid-19 and the number of confirmed cases worldwide surged past 200,000.
The FTSE 100 index closed down 214.32 points, or 4.1%, at 5,080.58.
The FTSE 250 ended down 916.69 points, or 6.6%, at 13,008.19, and the AIM All-Share closed down 36.11 points, or 5.8%, at 589.63.
The Cboe UK 100 ended down 3.4% at 8,630.88, the Cboe UK 250 closed down 5.9% at 11,346.41, and the Cboe Small Companies ended down 5.2% at 7,647.80.31.
In Paris the CAC 40 ended down 5.9%, while the DAX 30 in Frankfurt ended 5.6% lower.
"Up until last week, US and European officials had been downplaying the virus. Since then, we have seen evidence in various policy measures adopted that the western leaders now 'get it', reacting to the message from financial markets that they should act. As western countries cancel public events, sporting leagues and university classes, economic policymaking is beginning to shift to a wartime mentality. This means central bankers working out which policies can be put in place to ensure businesses do not go bust as they are faced with the prospect of the population staying at home for several weeks," said Francis Scotland at Brandywine Global.
Spreadex analyst Connor Campbell said: "A recession at this point is inevitable. But there are recessions and there ARE recessions, and questions over what exactly will be left in the economic rubble of the coronavirus crisis appear to have put the fear of god in investors."
In the FTSE 100, WM Morrison Supermarkets closed up 11% after the supermarket chain urged shoppers to "just buy what we need" as it revealed a jump in sales in recent weeks due to nationwide panic-buying due to the coronavirus crisis.
For its financial year ended February 2, the FTSE 100-listed grocer said pretax profit jumped 44% to GBP435 million from GBP303 million the year before. Wm Morrison booked a GBP27 million exceptional gain in financial 2020 versus a loss of GBP93 million in financial 2019.
Peers J Sainsbury and Tesco closed up 13% and 1.2% respectively.
At the other end of the large cap index, travel stocks again found no relief as the crisis showed no signs of abating. Carnival closed down 34% and easyJet, down 17%.
On Tuesday, UK Foreign Secretary Dominic Raab said that the British public were now advised to avoid unnecessary travel.
Aerospace parts makers Meggiit and Rolls-Royce Holdings closed down 25% and 11% respectively amid reduced demand as the travel sector fell victim to the crisis.
"Aftermarket activities are likely to be temporarily halted as airlines try to conserve cash by any means possible. This will compound any production rate decision by the airframers. Stocks in our coverage exposed to aftermarket are Rolls-Royce, Safran and Meggitt. Similarly, investors are likely to see higher risks for corporates which were already facing industrial challenges, either internal (Trent 1000 for Rolls-Royce) or external (737MAX grounding for Safran, Senior)," said analysts at Credit Suisse.
The pound was quoted at USD1.1755 at the London equities close, down sharply from USD1.2057 at the close Tuesday. Sterling fell to an intraday low of USD1.1744 in afternoon trade against the greenback - its lowest level since 1985.
The UK economy has been thrown into chaos due to the spread of the coronavirus, with people advised to avoid unnecessary social contact, which has put pressure on pubs, cinemas and hotels.
On Wednesday, the UK Department of Health confirmed 676 new Covid-19 cases, bringing the total to 2,626.
On Tuesday, UK Chancellor of the Exchequer Rishi Sunak said the government would roll out further emergency fiscal policy measures, including a GBP330 billion government-backed guaranteed loan scheme for businesses, and a further GBP20 billion of stimulus.
Alex Kuptsikevich, FxPro senior financial analyst told Alliance News: "The pound is very closely correlated with sentiment in the stock markets, under pressure against the backdrop of global asset sales. Belief in the UK currency was undermined by an increased number of new cases and the strengthening of measures to curb the spread of the disease. The coronavirus spreading has interrupted the two-day sequence of slowdown, returning alarming sentiments to investors.
"More broad and strict quarantine measures promise to provide an additional blow to the economy. Yesterday, the pound barely caught on at 1.20 against the dollar, but today the liquidation continued, forcing GBPUSD to rewrite its lows reached at the peak of fears around Brexit. Earlier this week, EURGBP jumped above 0.9000, returning to the heights of the last four years. Chaotic market movements may push sterling even lower, triggering stop-orders and create risks to push Pound even lower amid market's turbulence."
The euro stood at USD1.0840 at the European equities close, down from USD1.0974 late Tuesday.
In economic news from the continent, eurozone inflation softened as expected in February, data from Eurostat showed.
The annual consumer price inflation rate eased to 1.2% in February from 1.4% in January, in line with Eurostat's earlier flash estimate. A year ago, the rate stood at 1.5%. Month-on-month, consumer prices were up 0.2% in February.
Against the yen, the dollar was trading at JPY108.37, up from JPY107.44 late Tuesday.
Stocks in New York were sharply lower at the London equities close as the toll on the US economy mounts from the rapid near-shutdown of key industrial and services sectors due to the virus.
The DJIA was down 6.0%, the S&P 500 index down 5.2% and the Nasdaq Composite 4.1%.
The US Treasury Department wants to start issuing direct payments by early next month as part of a trillion-dollar plan to stabilise the economy as the coronavirus pandemic threatens taxpayers and businesses.
In a memorandum issued on Wednesday, the Treasury calls for two USD250 billion cash infusions to individuals: a first set of cheques issued starting on April 6, with a second wave in mid-May.
As the crisis became more severe, President Donald Trump announced the closure of the US-Canada border to non-essential travellers as the coronavirus epidemic intensified in both countries, but said that trade would not be hit.
The shutdown built on Trump's barring of visitors from most of Europe, China and other parts of the world, as the number of confirmed virus cases in the US surged past 6,500, with 115 deaths.
Brent oil was quoted at USD26.08 a barrel at the London equities close, plunging from USD29.72 at the close Tuesday. The North Sea benchmark fell to an intraday low of USD25.76 in late afternoon trade - its lowest since 2003 amid reduced demand for fuel due to travel bans and social lockdown.
The US Energy Information Administration's latest weekly inventory report estimated a near 2-million-barrel build for the week to March 13. Analysts had expected an inventory build of 3.26 million barrels.
Gold was quoted at USD1,491.90 an ounce at the London equities close, down from USD1,527.67 late Tuesday.
The economic events calendar on Thursday has eurozone constrcution output figures at 1000 GMT.
The UK corporate calendar on Thursday has annual results from clothing retailer Next and first-quarter results from online grocer Ocado Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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