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(Alliance News) - Stocks globally started the week on a downbeat note as coronavirus cases continued to rack up in Europe and the US, with investors disappointed that US lawmakers have been unable to agree on a hefty stimulus package.
The FTSE 100 index was down 217.24 points, or 4.3%, at 4,973.54 Monday midday. The FTSE 250 was down 536.28 points, or 4.0%, at 13,056.36, and the AIM All-Share was down 4.9% at 593.00.
The Cboe UK 100 was down 3.5% at 8,433.07, the Cboe UK 250 was down 2.8% at 11,380.15, and the Cboe Small Companies down 1.0% at 7,536.58.
"Stock markets are down this morning as a deepening health crisis and an absence of a US rescue plan have weighed on sentiment," said David Madden at CMC Markets.
"Soaring infection rates, tighter restrictions and chatter of lockdowns are hitting equities," said Madden. "Traders have been waiting patiently for a stimulus package from the US, but petty political battling between the Democrats and the Republicans has prevented the US government from posting a rescue package – this is a big factor in the sell-off too."
A trillion-dollar Senate proposal to rescue the reeling US economy crashed to defeat Sunday after receiving zero support from Democrats, and with five Republicans absent from the chamber because of virus-related quarantines.
US Democrats said the Republican plan failed to sufficiently protect millions of American workers or shore up the critically under-equipped health care system during the coronavirus crisis.
In the US, stocks are called sharply lower. The Dow Jones is seen down 2.6%, the S&P 500 down 2.6% and the Nasdaq down 2.0%.
In European equities on Monday, the CAC 40 in Paris was down 2.7%, while the DAX 30 in Frankfurt was down 3.1%.
Italy, Iran and the US have reported soaring new death tolls as the coronavirus pandemic marches relentlessly across the globe.
The Italian Premier Giuseppe Conte went on live TV to announce he was tightening the country's lockdown and shutting down all production facilities except those providing essential goods and services.
Italy announced its biggest day-to-day increase of infections, which rose to 53,000 people, with nearly 800 new deaths. As bodies piled up in Italian hospitals, morgues and churches, and as medical workers pleaded for more help, there was no sign that Italy was yet taming its arc of contagion.
Worldwide, nearly 316,000 people have been infected and more than 13,600 have died, according to Johns Hopkins University.
In the UK, Prime Minister Boris Johnson has said the government is ready to impose tougher restrictions to curb the spread of the coronavirus if people do not follow guidance on social distancing.
His warning came as the latest official figures showed the number of people across the UK who have died after testing positive for Covid-19 has risen by 48 to 281, including patients aged 18 and 102 – thought to be the youngest and oldest victims so far.
The pound was quoted at USD1.1508 Monday midday, lower than USD1.1745 at the London close Friday.
The euro was quoted at USD1.0782, up from USD1.0700. Against the yen, the dollar was quoted at USD110.72 on Monday, down from JPY111.33 on Friday.
There were more coronavirus warnings in London at the start of the week, with shares in Pearson down 11%.
The educational published has paused its share buyback as it identified three trends in its current trading performance as a result of the Covid-19 outbreak.
The first trend identified by Pearson is uncertainty in the group's businesses that rely on learners and staff accessing physical sites. These businesses include Pearson VUE, the Pearson Test of English, US Student Assessments and higher institutions in South Africa, which is expected to hurt group profit. This is particularly true in the US, where test cancellations in several states is expected to lower operating profit for 2020 by GBP15 million.
However, the second and third trends were more positive, with a significant uplift in the use of Pearson's digital products and services and growing interest in its Global Online Learning units.
ITV was down 11% after the broadcaster withdrew its guidance for 2020 as well as its 2019 final dividend.
The blue-chip firm said recent restrictions on working practices have hurt ITV Studios' ability to film productions, leading to productions both in the UK and internationally being paused. ITV said it is unable to predict how the pause in productions would hurt revenue and profit of its studios.
As a result of the uncertainty of Covid-19, ITV has withdrawn its financial guidance for 2020, as well as its intention to pay an 8 pence annual dividend for 2020. Further, the board has decided not to propose the final dividend of 5.4 pence per share for 2019 at the forthcoming annual general meeting on April 24. ITV said savings realised from these steps will ensure that more than GBP300 million of cash will be retained within the business.
Among the winners, though, was Kingfisher, up 9.9%. The DIY retailer said it is seeing higher demand for its products following a sales slip in its most recently ended financial year.
In addition, the home improvements retailer said it has been required by the UK Financial Conduct Authority to delay the publication of its annual results, which were due to be reported on Tuesday, for at least two weeks.
Kingfisher said its sales in the twelve months to the end of January declined by 1.5% to GBP11.51 billion. On a constant currency basis, sales fell by 0.8%, the company noted. The FTSE 100-listed company said it will not be paying a dividend for its most recently ended financial year amid uncertainty caused by Covid-19.
Looking ahead, the company said, in February, its like-for-like sales were 7.6% higher year-on-year, or up 2.3% excluding the leap year impact. In the first two weeks of up to and including March 14, Kingfisher's like-for-like sales continued to be "positive", it said, with growth across all businesses within the core markets, strongly supported by e-commerce sales.
Royal Dutch Shell 'A' shares were up 2.0% and 'B' shares up 1.1%. The oil major said it will cut costs and capital expenditure and has decided not to continue with the next tranche of the share buyback programme in light of the coronavirus outbreak.
Last year, Shell promised shareholder returns of at least USD125 billion between 2021 and 2025
It did, though, leave its dividend untouched.
"With a yield well into double digits the market is clearly pricing in action on the dividend sooner rather than later. Perhaps there might even be a bit of relief if such a decision were to be made. For now the company appears to be attempting to stave off this difficult call by curbing its share buyback programme while cutting costs and expenditure," said Russ Mould at AJ Bell.
London-listed peer BP was down 3.3%, meanwhile, as the price of oil slumped further.
Brent oil was trading at USD25.47 a barrel Monday, down sharply from USD27.31 late Friday.
"Given the scale of the losses endured already, you have to question just how much lower it can feasibly go but, as is the case with stocks, the outlook is so unclear that beyond price alone, there isn't much of a bullish case," commented Craig Erlam at Oanda.
Gold was only slightly higher on Monday amid the shaky mood, quoted at USD1,493.68 from USD1,488.90 on Friday.
In the FTSE 250, Go-Ahead shares rose 8.9%. The transport operator, in line with a number of other London-listed firms on Monday, said it will suspend the payment of recently-declared dividend as coronavirus is hurting its operations.
The bus and trains services provider said the Covid-19 situation is rapidly evolving, particularly in the UK where the majority of the company's activities take place, with developments directly hurting travel demand.
Turning to its cash position, Go-Ahead said it has no debt maturities ahead of 2024. The company reported a strong balance sheet and good liquidity with adjusted net debt of GBP306.4 million as at December 28. However, the company said it has decided to suspend the proposed interim dividend of 30.17 pence per share declared on March 12, until "there is greater clarity" on the impact of Covid-19.
IWG, meanwhile, was slumped 19% after the office workspace provider said it will not be paying a dividend declared at the time of its full-year results announcement amid uncertainty caused by Covid-19.
The company said that some centres that were closed in China at the beginning of March are now operating again. However, IWG said it expects there to be pressure on its global business as countrywide lockdowns are implemented in an increasing number of geographies.
In addition, IWG said it will temporarily suspend the GBP100 million share repurchase programme. To date GBP27.5 million in buybacks have been completed.
In the London's junior AIM market, Novacyt surged 40% after getting US approval for its Covid-19 test.
The US Food & Drug Administration issued an Emergency Use Authorisation for Novacyt's Covid-19 test. As a result, hospitals and laboratories in the US will be able to use the test for clinical diagnosis of Covid-19. The test is available for immediate distribution into the US market.
Primerdesign, the company's molecular diagnostics division, launched the Covid-19 test as a research-use-only test on January 31 and as a CE-Mark test on February 17.
By Lucy Heming; lucyheming@alliancenews.com
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