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(Alliance News) - Stocks in London were sharply lower at midday on Friday, as UK Prime Minister Boris Johnson tested positive for the new coronavirus and the US became the country with most infections in the world.
Healthcare systems in the world's most developed countries are being stretched to breaking point with dire warnings they could soon be overwhelmed. More than 530,000 people globally have been infected by the virus that causes Covid-19.
A tally by Johns Hopkins University showed that by around 0900 GMT Friday, there were almost 86,000 known infections in the US. That figure is higher than in both originator China and in hard-hit Italy, which accounts for a third of the 24,000 deaths worldwide.
The FTSE 100 index was down 282.14 points, or 4.9%, at 5,533.59. The FTSE 250 was down 518.57 points, or 3.4%, at 14,862.14. The AIM All-Share was down 10.55 points, or 1.6%, at 668.20.
The Cboe UK 100 index was down 2.3% at 9,463.57. The Cboe 250 was down 3.1% at 12,880.96 and the Cboe Small Companies down 0.4% at 8,114.63.
In Paris the CAC 40 was off 3.8%, while the DAX 30 in Frankfurt was down 2.8%.
"Equity markets are in the red amid the deepening health crisis. Italy, Spain and the US are in the spotlight in terms of confirmed cases. Today the EU leaders will hold a virtual summit to discuss the situation. There has already been criticism levied at European leaders for a lack of coordination in tackling the pandemic. The absence of a strong united front is hanging over equity markets this morning. US lawmakers will vote again on the rescue package, and traders are hopeful it will get approved," said CMC Markets analyst David Madden.
In the FTSE 100, Russian gold miner Polymetal International was the only riser, up 0.5% as risk-off mood prevailed in light of the negative sentiment.
At the other end of the large cap index, Carnival was the worst performer, down 14% after US President Donald Trump said he told cruise lines to incorporate themselves domestically if they want to access loans from a massive US stimulus package.
Carnival is listed in the UK as Carnival PLC and in the US as Carnival Corp. Its global headquarters is in Miami, but Carnival Corp is registered in Panama according to the articles of incorporation posted on its website.
The US Senate on Wednesday approved a USD2.2 trillion spending bill that sets aside USD500 billion for large corporations, but stipulates that money can only be given to firms "created or organised in the US". In the New York pre-market, Carnival Corp shares were down 13%, having risen 14% on Thursday.
Meggitt was down 8.9%. The aerospace and defence contractor said it will not be paying a final dividend for 2019 as part of cost-reduction measures taken in response to the Covid-19 pandemic.
"This action, together with a series of significant measures to reduce costs and tightly manage cash flow, will further strengthen our financial position and liquidity," the company explained in its statement Friday.
Flutter Entertainment was down 8.1%. The bookmaker said it is no longer proposing to pay a pro-rated dividend immediately before its Stars Group merger and intends to pay out its final 2019 dividend in shares only. On top of this, Flutter said it is suspending its dividend for 2020 due to "the impact of the current disruption caused by Covid-19 and the ambition for the combined group to de-lever".
SSE was down 7.7%. The energy company still intends to recommend a dividend of 80 pence per share for its financial year ending March 31, as the growing spread of Covid-19 makes no material impact on the group's performance for the period.
However, before any impact of Covid-19, SSE said it expects adjusted earnings per share to be at the lower end of its expected 83 pence to 88p range, but still representing a rise from 67.1p the year before. SSE said its adjusted operating profit for the year will show a high single-digit percentage year-on-year drop in SSEN Transmission, SSEN Distribution and investment in SGN, due to lower than expected Distribution Use of System electricity volumes and a greater number of network faults.
However there would be a 25% increase in adjusted operating profit for SSE Renewables, driven by a full year of output from the Beatrice offshore wind farm.
Housebuilders were in the red after UK government ministers urged buyers to put their imminent property moves on hold during the UK lockdown designed to stem the tide of the new coronavirus.
Barratt Developments was down 8.4%, Berkeley 8.3%, Persimmon 8.0% and Taylor Wimpey 6.3%.
Housing Secretary Robert Jenrick said those due to move house should rearrange to a new date and delay the process of changing property.
"If mortgages for customers on a higher loan-to-value do not come back at the same level when the current health crisis is over, then people will find borrowing much more expensive. Housebuilders might have to cut their asking prices to sustain demand and this would put increasing pressure on industry margins. For the time being all housebuilders can do is shut down construction sites and cut dividends as they batten down the hatches to weather the storm," said AJ Bell's Russ Mould.
In the FTSE 250, Provident Financial was the worst performer, down 16% after the subprime lender withdrew forward guidance for 2020 and the final payout for 2019 due to uncertainty created by the Covid-19 outbreak.
Provident said it saw no major impact from Covid-19 on trading in the first 11 weeks of 2020, but UK government restrictions together with the company's own actions are likely to hurt credit issued and collections. Provident has decided to withdraw the 16p per share final payout for 2019, which equates to GBP40 million. It plans to make future dividend decisions as and when conditions normalise.
The Bradford-based company remains "heavily" focused on managing capital and liquidity through tightening underwriting across each business, particularly Moneybarn, and maintaining tight control on costs.
Royal Mail was down 15% after the postal operator said it expects to report a financial 2020 adjusted operating profit, but its UK Parcels, International & Letters business is likely to be "materially loss making" in financial 2021.
For its financial year ending March 2020, Royal Mail said it still expects a between GBP300 million and GBP340 million adjusted operating profit before IFRS 16, as forecast in May 2019 when it published its financial 2019 result.
However, while there is "significant uncertainty going forward", UKPIL is likely to post a loss for financial 2021 while profitability for Royal Mail's other main business, General Logistics Systems, will be "significantly reduced".
At present, Royal Mail has more than GBP800 million in cash as well as a GBP925 million revolving credit facility. It is not recommending a final dividend for financial 2020.
The pound was quoted at USD1.2265 at midday, up from USD1.2132 at the London equities close Thursday.
UK PM Johnson has tested positive for coronavirus and is self-isolating in Downing Street. Johnson, 55, was tested in Number 10 after experiencing mild symptoms on Thursday. In a video on his Twitter account, Johnson said he had developed a temperature and a persistent cough.
He added: "I'm working from home and self-isolating and that's entirely the right thing to do. But, be in no doubt that I can continue thanks to the wizardry of modern technology to communicate with all my top team to lead the national fightback against coronavirus."
A Downing Street spokeswoman said the PM was tested on the personal advice of England's chief medical officer, Professor Chris Whitty.
Earlier in the week it was announced that the Prince of Wales also was suffering "mild symptoms" of the disease.
The euro stood at USD1.1140 at midday, up from USD1.1004 late Thursday
Against the yen, the dollar was trading at JPY108.62, down from JPY109.57 late Thursday.
Stocks in New York are set to open lower on Friday after a three-day US stimulus-inspired equity market rally begins to fizzle out.
The DJIA was called down 2.4%, the S&P 500 index down 2.1% and the Nasdaq Composite down 2.4%.
Brent oil was quoted at USD26.03 a barrel at midday, down from USD27.06 at the London close Thursday. Gold was quoted at USD1,624.78 an ounce at midday, lower than USD1,627.35 late Thursday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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