LONDON MARKET OPEN: Travel Stocks Sink Amid Coronavirus Global Spread

(Alliance News) - Stock prices in London opened sharply lower on Monday with travel stocks weighing on the FTSE 100, following a surge in coronavirus infections around the globe.

The FTSE 100 index was down 160.03 points, or 2.2%, at 7,243.89. The FTSE 250 was down 401.37 points, or 1.9% at 21,378.83, and the AIM All-Share was down 10.03 points, or 1.0% at 962.59.

The Cboe UK 100 index was down 2.0% at 12,270.20. The Cboe UK 250 was down 1.6% at 19,343.66, and the Cboe UK Small Companies was down 0.1% at 12,549.40.

In European equities, the CAC 40 in Paris was down 2.7% and the DAX 30 in Frankfurt down 2.5%.

Investors are becoming more concerned the virus outbreak could have a much longer-term impact on the world economy and company earnings as it spreads further outside China.

The COVID-19 disease has killed nearly 2,600 people and infected 80,000. Investors had been optimistic the outbreak was being contained outside China; however a spike in infections and deaths in other countries including South Korea, Italy and Iran have prompted fears of a pandemic.

The coronavirus epidemic could put an already fragile global economic recovery at risk, the IMF warned Sunday, as G20 financial chiefs voiced "real concern" over its economic ripple effects.

Global growth was poised for a modest rebound to 3.3% in 2020, up from 2.9% last year, International Monetary Fund chief Kristalina Georgieva said after a two-day meeting of G20 finance ministers and central bank governors in Riyadh.

Georgieva told the Riyadh gathering that the outbreak would shave about 0.1 of a percentage point from global growth and constrain China's growth to 5.6% this year, in a baseline scenario.

On the London Stock Exchange, Russian gold miner Polymetal International was among a handful of blue chip risers, up 3.5% tracking spot gold prices higher.

Gold was quoted at USD1,675.26 an ounce Monday morning, up sharply from USD1,643.10 late Friday, as demand for the safe-haven asset increased amid the coronavirus concerns.

At the other end of the large cap index airline stocks were among the worst performers amid fears of weakening demand for travel as the spread of the coronavirus widened to 30 countries across the world - a situation the World Health Organization is calling "worrisome."

easyJet was the worst blue chip performer, down 11%, TUI was down 9.0% and British Airways parent International Consolidated Airlines Group down 8.5%. Elsewhere, Irish carrier Ryanair Holdings was down 8.9%.

Last week, the International Air Transport Association announced that its initial assessment of the impact of the coronavirus outbreak showed a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region.

IATA's initial assessment of the impact of COVID-19 outbreak said that lost revenue for 2020 could amount to USD29.3 billion, and result in a 4.7% hit to global demand.

"The estimated impact of the COVID-19 outbreak also assumes that the center of the public health emergency remains in China. If it spreads more widely to Asia-Pacific markets then impacts on airlines from other regions would be larger," IATA said last week.

In China, the Shanghai Composite closed down 0.3%, while the Hang Seng index in Hong Kong ended down 1.6%. Financial markets in Japan were closed on Monday for the Emperor's Birthday holiday.

The pound was quoted at USD1.2963 early Monday, marginally lower from USD1.2970 at the London equities close Friday.

The UK is preparing to detail its demands for a post-Brexit trade deal with the EU. Ministers are expected to recommit to seeking to obtain a Canada-style agreement in the negotiating mandate scheduled for publication on Thursday.

However, this could set up a clash with the EU after its chief negotiator Michel Barnier ruled out the possibility the UK can have the same deal as the North American nation. The government is expected to publish its negotiating mandate for a desired free trade agreement with the US the following week.

The euro was quoted at USD1.0817 early Monday, down from USD1.0863 late Friday. Against the yen, the dollar was trading at JPY111.57, down from JPY111.72 late Friday.

Oil was quoted at USD57.08 a barrel Monday morning, down from USD57.80 late Friday.

The economic events calendar on Monday has UK mortgage approvals figures at 0930 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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