(Alliance News) - US President Donald Trump late Wednesday said he was suspending all travel between the US and Europe – excluding the UK and Ireland – for 30 days starting on Friday as he seeks to combat the coronavirus.
Trump made the announcement in an Oval Office address to the nation, blaming the EU for not acting quickly enough to address the outbreak of the virus and saying US clusters were "seeded" by European travellers.
"We made a lifesaving move with early action on China," Mr Trump said. "Now we must take the same action with Europe."
Trump said the restrictions would not apply to the UK. A list of 26 affected countries published on the US Homeland Security website also confirmed Ireland was not among nations subject to the ban.
Homeland Security officials later clarified the new travel restrictions would only apply to most foreign nationals who had been in the "Schengen Area" at any point for 14 days prior to their scheduled arrival to the US. The area includes Italy, German, Greece, Austria, Belgium and others.
It doesn't apply to legal permanent residents, immediate family of US citizens or others "identified in the proclamation."
The drastic action by the US came as London-listed companies early Thursday continued to warn on the impact of the virus spread, including housebuilder Berkeley Group postponing a planned increase in payouts to shareholders.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 2.3% at 5,741.97
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Hang Seng: down 3.7% at 24,294.17
Nikkei 225: closed down 4.4% at 18,559.63
DJIA: closed down 1,464.94 points, 5.9%, at 23,553.22
S&P 500: closed down 4.9% at 2,741.38
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GBP: down at USD1.2813 ( USD1.2880)
EUR: up at USD1.1317 (USD1.1264)
Gold: down at USD1,636.95 per ounce (USD1,649.40)
Oil (Brent): down at USD33.85 a barrel (USD36.02)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1100 GMT Ireland consumer price index
1100 CET EU industrial production
1345 CET EU European Central Bank interest rate decision
1430 CET EU press conference with ECB President Christine Lagarde
0830 EDT US producer price index
0830 EDT US initial jobless claims
1030 EDT US EIA weekly natural gas storage report
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Ministers are expected to sign off on moving the UK into the "delay" phase of combating coronavirus after the global outbreak was declared a pandemic. UK Prime Minister Boris Johnson will chair a Cobra meeting at lunchtime on Thursday where ministers are due to assess whether government action should shift out of the containment stage. Moving to delay would mean social distancing measures could be brought in, such as restricting public gatherings, and more widespread advice to stay at home. It comes after eight people with covid-19 were confirmed to have died in the UK, while the total number of positive cases rose to 460.
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The UK economy could tumble into recession if the coronavirus outbreak causes widespread disruption, despite the UK chancellor injecting GBP30 billion in the budget to soften the financial blow, a watchdog has warned. The Office for Budget Responsibility warned that "a recession this year is quite possible" if covid-19 causes further havoc for businesses and workers as the outbreak reaches its peak in the coming months. Paul Johnson, director of the Institute for Fiscal Studies, said: "The key risk is that once again growth disappoints, and that this leaves the chancellor with the choice of whether to rein back again on spending, or to announce further tax rises, or to abandon his fiscal targets and to allow debt to rise further." The influential IFS is due to give its full verdict on the budget at a briefing on Thursday.
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UK house price inflation appears to be gathering pace amid growing demand from buyers, according to surveyors. A net balance of 20% of property professionals saw an uplift rather than a fall in housing market inquiries in February, the Royal Institution of Chartered Surveyors said. It marked the third month in a row when demand has increased, with growth being seen across virtually all parts of the UK over the month, the report found. But RICS said that while near-term sales expectations are positive, optimism has moderated somewhat, with anecdotal evidence suggesting concerns over the economic impact of coronavirus are weighing on the outlook to some extent. Meanwhile, a net balance of 29% of surveyors reported house price increases in February, up from a balance of 18% the previous month.
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BROKER RATING CHANGES
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JPMORGAN CUTS SHELL B TO 'NEUTRAL' (OVERWEIGHT) - PRICE TARGET 1750 (2850) PENCE
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BERNSTEIN RAISES BURBERRY TO 'MARKET-PERFORM' ('UNDERPERFORM') - TARGET 1800 PENCE
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DEUTSCHE BANK CUTS BURBERRY PRICE TARGET TO 1950 (1990) PENCE - 'HOLD'
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BANK OF AMERICA CUTS FEVERTREE DRINKS TO 'NEUTRAL'
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COMPANIES - FTSE 100
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Berkeley Group said it will postpone a planned GBP455 million increase in shareholder returns until it receives "greater clarity" over the impact from coronavirus. The housebuilder said it has experienced a continuation of the good trading environment announced with its interim results, with underlying demand maintained. The firm still expects to meet market expectations for the financial year ending April 30. The company said that is has decided to postpone the planned GBP455 million increase in shareholder returns scheduled to be made via a B and C share scheme until the effect of coronavirus is "more measurable and certain". The board "is keen to stress" that it still intends to make the returns but will reassess this at its full-year results announcement in June, it added.
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Moody's Investors Service downgraded Carnival's senior unsecured rating, and senior secured revenue bond ratings with the ratings agency expecting the cruise ship operator to see "increased cancellations" due to the spread of the coronavirus. The two ratings were downgraded to Baa1 from A3, and the ratings agency added that "at the same time, Moody's placed the company's ratings, including its Prime 2 short-term rating for commercial paper on review for further downgrade". In February, Carnival had warned its earnings for the current financial year will suffer due to travel restrictions and trip cancellations amid the outbreak of covid-19.
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COMPANIES - FTSE 250
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WH Smith said it expects a hit between GBP30 million and GBP40 million to profit for its current financial year due to the Covid-19 outbreak. The retailer said that in Asia Pacific, which accounts for 5% of its travel unit's revenue, it has seen a "significant impact" on business since February. The company's travel unit operates stores selling books, magazines and snacks in places such as airports and train stations. In addition, WH Smith said it has seen a "material reduction" in the past fortnight in passenger numbers at airports outside of Asia Pacific, in the UK, US and Europe. WH Smith expects a revenue hit of between GBP100 million to GBP130 million for the financial year ending August 31, resulting in a hit to underlying pretax profit of around GBP30 million to GBP40 million. Headline pretax profit in the 2019 financial year amounted to GBP155 million.
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Ticket selling platform Trainline struck a cautious tone over the virus. The group reported 17% growth in ticket sales for the financial year ended February 29, with revenue up 24% to GBP261 million. However, it said the trading backdrop has become "more challenging" in past weeks, with trade softening "significantly" in February in Italy and demand weakening across the rest of its international operations. The UK has remained "more resilient", but growth has slowed.
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Cineworld reported lower profit in 2019 and warned there can be "no certainty" over the impact of Covid-19. Revenue for 2019 rose to USD4.37 billion from USD4.12 billion, but pretax profit slumped to USD212.3 million from USD349.0 million. This was as finance expenses doubled to USD568.0 million from USD225.2 million, which Cineworld said was largely due to the adoption of accounting rule IFRS16 governing lease liabilities. Looking ahead, the company said there can be "no certainty" over the future impact of Covid-19, though it has seen a "minimal impact" thus far. Under the 'going concern' section of the results release, downside scenario analysis considered the loss of up to three months' revenue due to Covid-19.
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COMPANIES - INTERNATIONAL
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National Australia Bank Chief Executive Ross McEwan welcomed the Australian government's response to the coronavirus outbreak and has vowed the bank will continue lending. Canberra on Thursday unveiled a massive USD11 billion spending plan designed to curb the economic impact of the coronavirus pandemic and avert Australia's first recession in 29 years. Prime Minister Scott Morrison announced the nearly AUD18 billion package – equivalent to just under one percent of GDP – which will primarily be targeted at businesses. Much of the money is expected to be distributed by the end of June, the country's treasurer said. Australia has seen 136 confirmed cases of coronavirus, and three deaths. McEwan only joined NAB in December, having been boss of Royal Bank of Scotland Group.
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Thursday's Shareholder Meetings
Benchmark Holdings
Henderson Opportunties Trust
Blackrock Income & Growth Investment Trust
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By Tom Waite; thomaslwaite@alliancenews.com
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