London close: Stocks extend losses as strategists balk at ‘buying the dip’ – ShareCast
The FTSE 100 was down 1.94% at 7,017.88 and the FTSE 250 was off 1.90% to 20,715.97.
Sterling remained stronger against its two major pairs, last rising 0.62% against the US dollar to $1.3007 and 0.4% on the euro to €1.1959.
The FTSE 100 had opened marginally higher on Tuesday, after suffering its worst single-day points loss since August 2015 on Monday, as investors rushed to safety amid the outbreak.
Market participants were looking past the slowing rate of infection in China, as well as the relaxation of travel restrictions in places such as Beijing, and focusing on the rapidly-growing number of infections in countries including Italy and South Korea.
By Tuesday afternoon, eight people had died and 283 people were confirmed to be infected in Italy, as authorities there placed a number of localities on lockdown.
“The morning bounce in European markets and US futures is a distant memory, as indices push to new lows thanks to the ongoing spread of the coronavirus. After such a big move yesterday, volatility is not going to disappear immediately, and we should expect things to take a while to settle down,” said IG chief market analyst Chris Beauchamp.
“October’s selloff happened over several days, and v-bottoms are a rarity, and it does not feel like we have hit a sufficiently high level of panic yet.”
Supply chain concerns were also emerging, with Associated British Foods warning that some clothing lines at its fast fashion brand Primark could face shortages later in the year if production capacity remained constrained in China.
AB Foods shares remained in the red, alongside peer Next, while Marks & Spencer was slightly higher.
Analysts were also looking at the wider effects of the outbreak in Italy, with Rabobank suggesting that a rate cut from the European Central Bank was now far likelier.
“Given the impossibility of the virus remaining an Italian problem – the global spread makes it clear that this is set to be an issue facing Europe as a whole – the market is only likely to price in a greater possibility of an ECB response,” Rabobank wrote.
“At the time of writing a 75% chance of a 10 basis point depo cut before the year is out was priced, versus a 52% [chance] on Friday.”
On the economic front, the latest quarterly CBI Distributive Trades Survey showed that retail volumes edged ahead marginally, to a balance of 1%, in the year to February. That compares to 0% in January and December, and was the highest since April 2019, but was below the consensus, for around 3%.
Howard Archer, chief economic advisor to the EY Item Club, said: “While showing marginal improvement, the February survey does not really do much to advance the case that the marked rise in consumer confidence since December’s decisive election has lifted their willingness to spend.”
In equities, insurer Prudential gave back early gains even after it said that it would hold talks with activist hedge fund Third Point over its demands that it spin off its Asian and US businesses.
Third Point has built a stake worth $2bn in Prudential to become its second largest shareholder and wrote to the UK company on Monday outlining position.
“Prudential proactively engages with shareholders with regards to group strategy and structure, and looks forward to commencing a dialogue with Third Point with regard to the views outlined in its letter,” the insurance giant said on Tuesday morning.
Bunzl continued its rally a day after it reported a 1% improvement in its revenue at constant exchange rates in its final results.
Petrofac was in the green, after posting “solid” operational performance in all of its businesses in its full-year results, even its business performance net profit fell 22% to $276m (£213.1m).
The FTSE 250 company said its reported net profit for the year ended 31 December totalled $73m post impairments and exceptional items, rising from $64m year-on-year.
On the downside, Meggitt tumbled after it said the suspension of Boeing’s 737 Max aircraft and the impact of coronavirus would slow revenue growth in 2020, even as it reported an 11% increase in 2019 profit.
Underlying pre tax profit for the year to the end of December rose to £370.3m from £334.8m as organic revenue increased 8% to £2.28bn. Statutory pretax profit rose 33% to £286.7m as reported revenue rose 9%.
Croda International was on the back foot after a fall in annual profit, as the specialty chemicals company’s sales were affected by a slower US personal care market and weak industrial demand.
Adjusted pre tax profit for the year to the end of December declined 2.8% to £322.1m from a year earlier as core sales slipped 0.2% to £1.27bn. Excluding currency movements profit fell 3.7% and sales dropped 2.3%.
Construction products supplier SIG was the biggest faller on the FTSE 250, after it told shareholders that full-year results were expected to be in line with guidance, with underlying pre-tax profits of roughly £42m.
The company also revealed a major shakeup of its boardroom, with Meinie Oldersma resigning from the role of chief executive and Nick Maddock standing down as chief financial officer, both with immediate effect.
Travel and tourism plays were in the red again as the coronavirus outbreak affected the appeal of their product, with TUI, Carnival and easyJet all adding to their losses from the previous session.
It emerged late in the morning that around 1,000 guests at a resort in Tenerife were now on lockdown, after a travelling Italian doctor tested positive for coronavirus.
FTSE 100 (UKX) 7,017.88 -1.94%FTSE 250 (MCX) 20,715.97 -1.90%techMARK (TASX) 3,989.41 -2.06%
FTSE 100 – Risers
NMC Health (NMC) 880.20p 3.77%Bunzl (BNZL) 2,050.00p 2.45%Pearson (PSON) 582.00p 0.41%Prudential (PRU) 1,421.00p 0.04%Ocado Group (OCDO) 1,095.00p -0.05%Anglo American (AAL) 1,939.00p -0.20%Just Eat Takeaway.Com N.V. (CDI) (JET) 7,205.00p -0.21%Johnson Matthey (JMAT) 2,619.00p -0.27%Imperial Brands (IMB) 1,696.00p -0.32%Hikma Pharmaceuticals (HIK) 1,835.50p -0.38%
FTSE 100 – Fallers
Carnival (CCL) 2,639.00p -5.92%Meggitt (MGGT) 563.80p -5.15%TUI AG Reg Shs (DI) (TUI) 730.20p -4.87%Legal & General Group (LGEN) 287.00p -4.59%Associated British Foods (ABF) 2,430.00p -4.44%Kingfisher (KGF) 199.00p -4.28%Barratt Developments (BDEV) 806.00p -3.70%Standard Chartered (STAN) 584.40p -3.66%easyJet (EZJ) 1,213.00p -3.50%SSE (SSE) 1,600.00p -3.35%
FTSE 250 – Risers
Pollen Street Secured Lending (PSSL) 884.00p 6.76%Plus500 Ltd (DI) (PLUS) 884.00p 4.00%Tullow Oil (TLW) 37.23p 3.42%Hilton Food Group (HFG) 1,050.00p 2.94%Hammerson (HMSO) 227.50p 2.43%Morgan Advanced Materials (MGAM) 295.40p 2.21%Britvic (BVIC) 904.00p 1.46%Bank of Georgia Group (BGEO) 1,741.00p 1.40%Spectris (SXS) 2,992.00p 1.29%Signature Aviation (SIG) 301.50p 0.97%
FTSE 250 – Fallers
SIG (SHI) 68.50p -17.91%Future (FUTR) 1,232.00p -6.24%Rank Group (RNK) 301.50p -5.93%TI Fluid Systems (TIFS) 213.00p -5.33%Kaz Minerals (KAZ) 428.50p -5.32%William Hill (WMH) 176.60p -5.13%Syncona Limited NPV (SYNC) 247.00p -4.82%Restaurant Group (RTN) 117.50p -4.47%Vistry Group (VTY) 1,343.00p -4.28%Pets at Home Group (PETS) 284.00p -4.18%