(Alliance News) - London stock prices were, once again, deeply the red on Wednesday as the latest round of government stimulus in the UK and elsewhere failed to provide a sustained upturn in mood.
Also suffering from market panic was the pound, which dropped below the USD1.20 mark, now trading around its worst levels since just after the UK's vote to leave the EU in 2016, as No. 11's GBP330 billion package to counter Covid-19 failed to provide much comfort.
The FTSE 100 was down 216.61 points, or 4.4%, at 5,078.29 Wednesday midday. The blue-chip index had closed 2.8% higher on Tuesday.
The mid-cap FTSE 250 index was down 693.16 points, or 5.0%, at 13,231.72.
The AIM All-Share index was down 4.2% at 599.79. A month ago, the index was trading above the 970 mark.
The Cboe UK 100 index was down 3.8% at 8,593.62. The Cboe 250 was down 4.8% at 11,482.56, and the Cboe Small Companies down 1.6% at 7,936.31.
In France and Germany, the CAC 40 was down 5.6% and the DAX 30 down 5.2%.
Sterling was quoted at USD1.1903 Wednesday midday, down sharply from USD1.2057 at the London equities close on Tuesday.
The euro traded at USD1.0973 on Wednesday, flat on USD1.0974 late Tuesday. Against the yen, the dollar was unchanged from JPY107.44 late Wednesday.
"European markets are on the back foot once more today, with the recent fiscal and financial boost already starting to wane. While the announcement of supportive measures has sidetracked traders for a short period of time, such boosts will only provide a brief reprieve from the overwhelming sense of fear over exactly how this virus will impact the economic landscape," said Joshua Mahony, senior market analyst at IG.
In New York, stocks are set for another tumble Wednesday. The Dow Jones Industrial Average is pointed down 3.9%, the S&P 500 down 3.7% and the Nasdaq down 4.4%. They had closed up 5% to 6% on Tuesday.
On Tuesday, US Treasury Secretary Steven Mnuchin said officials were drawing up a package that could surpass USD1 trillion, on top of USD300 billion in deferred tax payments.
The measures – far surpassing aid during the 2008 financial crisis meltdown – are likely to include direct cash payments to struggling families.
The package is in addition to USD100 billion directed at paid sick leave and expanded unemployment benefits already moving through Congress.
A bailout for US airlines could also be in the works, after Mnuchin said they face a crisis now "worse than 9/11".
UK Chancellor Rishi Sunak unveiled an "unprecedented package" of government-backed loans worth GBP330 billion for businesses struggling in the sudden economic paralysis caused by mass self-quarantine.
The global number of cases worldwide of the virus now exceeds 197,000, though more than 81,000 of them have recovered, mostly in China. Covid-19, the disease caused by the virus, has killed more than 7,900 people.
In Italy, infections jumped to 27,980 on Tuesday. With 2,503 deaths, Italy accounts for a third of the global death toll. Spain, the fourth-most infected country, saw its cases rise by more than 2,000 in one day to 11,178. Deaths from Covid-19 jumped to 491, a toll that included 17 elderly residents of a Madrid nursing home who died over five days.
Some bright spots have emerged. Wuhan, the central Chinese city where the virus was first detected late last year and which has been under lockdown for weeks, reported just one new case for a second straight day on Wednesday.
"Amid the chaos of the coronavirus, there are some companies that have seen an increase in business activity. Supermarkets have witnessed a surge in buying as some people began stockpiling items," said David Madden at CMC Markets.
Shares in Wm Morrison Supermarkets were up 5.8% as the grocer reported a rise in annual profit and said it has seen "considerable stocking up" buying in recent weeks as customers plan for the Covid-19 lockdown.
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.
Morrisons said sales have continued to improve as customers have stocked up to prepare for the impact of the outbreak.
"During the last two weeks, there has been considerable stocking up and sales pull-forward as customers plan for the impact of Covid-19. Overall, for the first six weeks of 2020-21, retail contribution to LFL was 5.0%," the company said.
Peer J Sainsbury shares were up 7.3%.
Another riser was Reckitt Benckiser, up 4.2%. The firm, which makes painkiller Nurofen and household cleaning products brand Dettol, received ratings upgrades from both Jefferies and Exane BNP.
"While alive to the dangers of over-extrapolating a bubble, we now expect a rolling global pandemic to be a significant enhancer of volumes," said Jefferies, noting that around 9% of Reckitt's sales are "directly exposed" antiseptics and sanitisers.
Meanwhile, London's transport and travel sector remained hard hit. National Express was down 37%, Go-Ahead down 9.5%, Ryanair down 6.1%, easyJet down 11% and Carnival down 16%.
In the FTSE 250, Micro Focus International slipped 15% after warning it is no longer recommending a final dividend for its most recent financial year due to uncertainty caused by the Covid-19 pandemic.
The business software firm had intended to propose a final dividend 58.33 cents per share for its financial year that ended October 2019 to its upcoming annual general meeting on Wednesday next week. However, Micro Focus has now withdrawn the dividend resolution, resolution number 2, citing "the current increased macro uncertainty, which has been uniquely impacted by the global spread of Covid-19".
So far, the company said, Covid-19 has not had "any material impact" on its business, but "the ultimate impact on the global economy is unknown".
The firm stressed that its decision to scrap its final dividend does not alter its view that Micro Focus "remains appropriately capitalised, with robust profits underpinned by recurring strong cash flows". It had cash in hand of more than USD600 million at the end of February.
Cineworld shares surged 48% on Wednesday, though the stock still remains 81% lower compared to this time a month ago, as investors fret Covid-19 will leave cinemas empty.
Gold was quoted at USD1,508.11 an ounce midday Wednesday, lower than USD1,527.67 on Tuesday. Brent oil was trading at USD27.68 a barrel, down from USD29.72.
"With no signs of oil demand picking up in the near future, the pressure on oil producing countries as well as highly leveraged shale and other oil producers is likely to intensify in the coming weeks. Even with the US buying up oil to top up its strategic reserves the price has continued to fall," said Michael Hewson at CMC Markets.
By Lucy Heming; lucyheming@alliancenews.com
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