Last checked at 
(Alliance News) - Stocks in London are set to slide further on Thursday as the coronavirus sell-off continues, while the pound has tumbled to 35-year lows.
In early UK company news, Burberry warned that the coronavirus outbreak has heavily hit sales, while Ocado reported a surge in orders in recent days due to Covid-19 stockpiling. Next said a stress test has shown it is able to withstand GBP1 billion in lost full-price sales due to the outbreak.
IG says futures indicate the FTSE 100 index of large-caps to open 85.00 points lower at 5,095.00 on Thursday. The FTSE 100 index closed down 214.32 points, or 4.1%, at 5,080.58 on Wednesday.
"In a day that is likely to go down in history, financial markets sank under a weight of selling yesterday, as we saw big declines across the board, with bond markets, equities and crude oil all getting battered as forced liquidations saw investors move into cash," said Michael Hewson at CMC Markets.
In the US on Wednesday, Wall Street ended in the red once again, with the Dow Jones Industrial Average ending down 6.3%, the S&P 500 down 5.2% and Nasdaq Composite closing 4.8% lower.
Losses in Asia on Thursday have been more moderate. The Japanese Nikkei 225 index closed down 1.0%. In China, the Shanghai Composite ended down 1.0%, while the Hang Seng index in Hong Kong is down 1.5%.
Also sent reeling on Wednesday was the pound, which continued to tumble overnight.
Sterling was quoted at USD1.1561 early Thursday, lower than USD1.1755 at the London equities close on Wednesday.
"The pound is now trading at a 35-year low against the US dollar, its seventh successive daily decline in a row as the greenback swept all before it, pushing it through the 2016 flash crash lows and below the USD1.1500 area. It is important not to understate what a big level this USD1.1960 level was given that there is little in the way of significant support between this level and the all-time lows at USD1.0500 seen at the beginning of 1985," said Hewson.
Meanwhile, the euro was slightly firmer after the European Central Bank late Wednesday unexpectedly said it would spend EUR750 billion on "emergency" bond purchases, as it joined other central banks in stepping up efforts to contain the economic damage from the coronavirus.
The so-called Pandemic Emergency Purchase Programme comes just six days after the ECB unveiled another big stimulus package that had failed to calm nervous markets, piling pressure on the bank to open the financial floodgates.
The decision came after the bank's 25-member governing council held emergency talks by phone late into the evening, following criticism the bank wasn't doing enough to shore up the eurozone economy.
"Extraordinary times require extraordinary action. There are no limits to our commitment to the euro," ECB Chief Christine Lagarde tweeted.
The ECB's move came amid dire news out of Italy, which reported 475 new deaths. More than 8,700 people have died around the world with fatalities in Europe now topping those in Asia, where the outbreak began in December in China.
With the number of global coronavirus infections shooting past 200,000, governments announced new containment measures and the US Congress approved a USD100 billion emergency relief package.
The euro traded at USD1.0938 early Thursday, firm on USD1.0840 late Wednesday. Against the yen, the dollar was quoted at JPY108.53 versus JPY108.37.
In early London company news, Burberry said Covid-19's hit to trading has "intensified" in recent weeks.
The luxury retailer said comparable retail store sales have been tracking 40% to 50% lower over the past six weeks.
Trading in mainland China has started to improve, but sales in Europe, Middle East, India & Africa, as well as the Americas, have fallen "materially" in the past few weeks. More than 60% of stores in EMEIA and 85% of those in the Americas are currently closed.
As a result of all this, Burberry expects comparable retail store sales to be down by 70% to 80% for the final weeks of the financial year. For the fourth quarter, comparable sales are to be around 30% lower.
Burberry said it has "significant" financial headroom, including liquidity of GBP900 million.
"Since our February update, the material negative effect of COVID-19 on luxury demand has intensified and is now impacting the industry in all regions...We remain confident in our strategy and the strength of our brand, and I am exceptionally proud of our teams' resilience and commitment." Marco Gobbetti, chief executive officer.
Ocado said it has seen a surge in orders in recent weeks due to Covid-19.
Retail revenue for the first quarter, which ended March 1, was up 10% year-on-year to GBP441.2 million. Average orders per week rose 10% to 343,000 while the average order size increase 0.3% to GBP110.24.
"The impact of higher basket values and order demand, amid growing public concern over the coronavirus, was limited in the quarter, although this has since picked up significantly," said Melanie Smith, Ocado Retail's chief executive officer.
The online grocer said growth in the second quarter "is so far double that" of the first due to the coronavirus outbreak. It does expect the impact of forward buying to unwind "at some point".
Ocado said its guidance for retail revenue growth in the current financial year of 10% to 15% is unchanged at this point, as the company assumes there has been a "large element" of forward buying some items, and added that there may be "further disruptions" ahead.
"However coronavirus unfolds, what is clear is that the fundamentals at Ocado Retail are strong, illustrated by double-digit increases in customer orders, driven by consistent execution, which deliver a best-in-market customer experience," Smith said. "Preparations for the M&S switchover from Waitrose, this September, are on track."
Next said it stands ready to weather a significant hit to sales from Covid-19, as it reported growth in annual profit.
Total sales for the financial year ended January were up 3.3% to GBP4.36 billion, while pretax profit rose 0.8% to GBP728.5 million.
Turning to Covid-19, Next said that when the pandemic first appeared in China, it assumed the threat was to its supply chain.
"It is now very clear that the risk to demand is by far the greatest challenge we face, and we need to prepare for a significant downturn in sales for the duration of the pandemic," said Next.
The retailer said the conclusion of a stress test showed the business could comfortably sustain the loss of more than GBP1 billion of annual full price sales without exceeding its current bond and bank facilities.
For the year ahead, the firm expects full price sales to grow 3.1% in the recently-commenced financial year, versus 3.7% in the recently ended one.
National Express said it has seen a "significant decline" in passenger numbers in recent weeks due to Covid-19.
The transport operator said it has already taken measures to reduce its cost base and protect cash flow.
In the UK, its coach service it reverting to a network similar to its Christmas Day service, removing up to 80% of capacity. UK bus is reducing its networks similar to a typical Sunday service, which amounts to the removal of around 40% of bus mileage.
Following the recent refinancing, National Express currently has committed fixed borrowing facilities of more than GBP1.3 billion and will retain this level for at least the next 18 months. Current undrawn committed facilities total around GBP500 million.
"At this stage we cannot give precise guidance to what this means for our profitability this year, but our cash flow over the next three months is still anticipated to be positive even in light of the material downturn in passenger volumes. Our balance sheet is strong and we have borrowing headroom of around £500 million, while we are holding discussions to increase this further," said Chief Executive Dean Finch.
Gold was quoted at USD1,481.33 an ounce early Thursday, lower than USD1,491.90 on Wednesday. Brent oil was trading at USD25.30 a barrel early Thursday, down from USD26.08 late Wednesday.
"The continued containment and lockdown response of the world's major economies in response to Covid-19 will advance to a sharp impact on oil demand, but the OPEC+ producer group's cranking up of supply into these unprecedented conditions will trigger even more selling," said Stephen Innes, chief market strategic at AxiCorp.
The economic events calendar on Thursday has eurozone construction output figures at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
