UK stocks opened on Monday to another massive sell-off, echoing the plunge in markets around the world, as investors grow increasing worried about the impact of coronavirus on the global population and economy.
London’s benchmark FTSE 100 opened about 2% lower before sharply falling further by 8.30am, down more than 5.5% to 5,064.70, going close to beaching the 5,000 mark for the first time in more than decade.
The FTSE 250 sank similarly, crashing 5.65% in early trade to 14,682.41.
Earlier, markets in Asia closed sharply lower after the US Federal Reserve cut interest rates to almost zero and launched a $700bn stimulus programme is a desperate attempt to prop-up its economy and markets.
That move was part of co-ordinated action announced alongside the eurozone, the UK, Japan, Canada, and Switzerland, but investors are now getting concerned there is precious little left in the tank for central banks to do if the pandemic gets even worse.
Japan's benchmark Nikkei 225 closed 2.5% lower, Hong Kong's Hang Seng lost 4%, and the Shanghai Composite in China was down by 3.3%.
Oil also sold-off sharply in early trade as the Fed move failed to stem worries over the global economy. Brent crude fell more than 7% putting barrel price at $31.50.
AIRLINES SLASH MORE FLIGHTS
Another day of bleak corporate news is led by airlines, with thousands of extra flights being cancelled as the world shuts itself away.
British Airways-owner International Consolidated Airlines (IAG) saw its share price plunge 26% to 258.6p after it slashed the number of seats available by 75% for April and May.
Willie Walsh, who was due to stand down as IAG boss this month, will remain in his role to deal with the crisis.
‘To date IAG has suspended flights to China, reduced capacity on Asian routes, cancelled all flights to, from and within Italy and made various changes to our network,’ the group said in a statement to the London Stock Exchange.
It is far from alone, with budget carriers EasyJet (EZJ) and Wizz Air (WIZZ) also axing masses of flights and closing down routes.
EasyJet confirmed ‘further significant cancellations’ as governments impose more travel restrictions and following ‘significantly reduced levels of customer demand’.
‘These actions will continue on a rolling basis for the foreseeable future and could result in the grounding of the majority of the EasyJet fleet,’ although it did say that it would continue to run rescue flights for short periods where it could, in order to repatriate customers.
Wizz Air has suspended all its flights to and from Poland until further notice following the government shutdown there. Flights in and out of Poland account for about 20% of Wizz Air revenues.
Shares in the two airlines fell by around 30% to 550.6p and £20.00 respectively.
No prizes for guessing that holidays firm TUI (TUI) is the biggest FTSE faller on Monday, after suspending the ‘vast majority’ of its global operations over the weekend.
‘The group has cash and available facilities of approximately €1.4bn and year-to-date performance had been in-line with expectations prior to COVID-19,’ the company said on Sunday. TUI, which is implementing ‘substantial cost measures to mitigate the earnings effect’ has also decided to apply for state aid guarantees to support the business until normal operations are resumed.
TUI shares collapsed by nearly 30% to 252.8p
BETS OFF AT PADDY POWER-OWNER
Betting firm Flutter (FLTR), which owns Paddy Power Betfair, says the cancellation of sports events at home and abroad will have a ‘material impact on the revenue and earnings of the group,’ sending the stock plunging nearly 22%.
In 2019 the firm generated approximately 78% of its revenues through bets placed on global sporting events.
DIY group Kingfisher (KGF) fell 14% to 117.3p as it shuttered its stores in France and Spain following official shutdowns in both nations.
Primark-owner Associated British Foods (ABF) crashed 12% to £16.155 after it warned that it will not be able to recapture the loss of sales at Primark caused by the virus outbreak as footfall slumps.
The warning came despite AB Foods upgrading its profit outlook for the first half, citing margin improvements at Primark and in its grocery business.
Online broker Plus500 (PLUS) shed 6% to 728.6p despite forecasting revenue and profitability for the full year to be substantially ahead of current consensus expectations, due to the recent bout of market volatility.
Student accommodation developer Unite (UTG) lost 11.5% to 832.5p on announcing that it would operate a reduced programme of summer business in 2020, given the risk of disruption to bookings from the coronavirus.
SMALL CAP WRAP
Recruitment firm SThree (STEM) slumped 8% to 231p as it reported a 3.6% fall in fee revenue in the first quarter of its financial year.
Food court operator and publisher Time Out (TMO:AIM) plunged 17% to 67.5p after it closed five of its markets in Lisbon and the US.
Security contractor Westminster (WSG:AIM) was a rare bright spot, adding 3% to 8.25p, following news that it had sold more fever detection equipment in the wake of the coronavirus outbreak.
Alternative asset and corporate business services provider Sanne (SNN:AIM) fell 6% to 448p after it agreed to sell its Jersey-based private client business to JTC for up to £12m.
Alternative fuel developer Quadrise Fuels (QFI:AIM) crashed 40% to 1.3p after a pilot project to test its product in Morocco was delayed due to the spreading disease.
