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London close: Shares hit by unexpected pick up in Coronavirus cases

By Alexander Bueso

Date: Monday 27 Jan 2020

London close: Shares hit by unexpected pick up in Coronavirus cases

(Sharecast News) - London stocks fell sharply on Monday, with miners and travel shares pacing the decline as worries over the spread of the nCoV coronavirus in China gripped markets.
Far from slowing or stabilising, the rate of new cases had climbed further over the weekend, with the number of people infected rising to more than 2,700 and the death toll increasing to over 80.

Further hitting sentiment, Chinese authorities warned that the virus could be transmitted even during its incubation phase and that its spread was likely to accelerate.

The FTSE 100 was down 2.29% at 7,412.05.

While safe havens such as gold rallied, oil prices tanked. West Texas Intermediate fell 3.0% to $52.61 a barrel and Brent crude was down 3.13% at $58.85.

Commenting on the 'black swan' event that was the new coronavirus, Chris Beauchamp at IG told clients: "Investors would beDip wise to anticipate further bad news on the virus, with infection tolls likely to rise, while any treatment is weeks away at the earliest."

Beauchamp continued: "John Bolton's revelations regarding the Ukraine seem to have galvanised some of Trump's Republican opponents into calling the former adviser as a witness, although such a move is a long way from actually voting for impeachment in the end. Nonetheless, it does not look like the president will have it all his own way."

In part linked to the risk of negative surprises from Capitol Hill, on 24 January, equity strategists at Morgan Stanley also sounded a cautious note, telling clients that improved investor sentiment was set to be tested over the next nine days.

Also according to Morgan Stanley, using the precedent of the SARS epidemic in 2003, markets were now in the middle of the first of three phases, which they termed the "escalation" stage, when the virus was spreading across geographies.

In 2003, escalation lasted from 16 November 2002 to 10 April 2003 and markets were now somewhere in the middle of that phase.

But from 12 March 2003, share prices began bouncing back sharply.

In the case of the S&P 500, from 16 November 2002 to 2 January 2003 the benchmark shed just 0.09%, followed by a 11.53% tumble until 12 March, but by 10 April it had rallied 8.38%, followed by another leg higher worth 8.11% by 13 May and yet another 5.09% by 31 July.

"Health scares, similar to localised war campaigns, as well as terrorist incidents, were historically buying opportunities, rather than the reasons for sustained selling," chimed in Mislav Matejka at JP Morgan.

With the focus firmly on coronavirus, the release of UK mortgage approvals came and went pretty much unnoticed. Figures from UK Finance showed that mortgage approvals hit a four-and-a-half year high in December.

In equity markets, travel and mining stocks were the worst hit amid worries about the coronavirus, with InterContinental Hotels Group, Carnival, Rio Tinto, Antofagasta and Anglo American all sharply lower. IAG was the worst performer on the top-flight index.

Luxury fashion brand Burberry, which has big exposure to China, was also under the cosh, dented further by a rating downgrade at MainFirst.

Speciality chemicals company Johnson Matthey was knocked lower by a downgrade at Bank of America and Rolls-Royce was weaker as Citi cuts its price target on the stock.

Elsewhere, shares of Amigo Holdings tumbled after the guarantor loans provider said it had launched a strategic review and formal sale process after its largest shareholder, the Richmond Group, said it would willingly sell its 60.66% holding in the company.

Market Movers

FTSE 100 (UKX) 7,412.05 -2.29%
FTSE 250 (MCX) 21,303.67 -2.11%
techMARK (TASX) 4,192.40 -1.85%

FTSE 100 - Risers

NMC Health (NMC) 1,407.00p 0.93%
BT Group (BT.A) 170.04p 0.54%
Polymetal International (POLY) 1,281.00p 0.24%
Flutter Entertainment (FLTR) 8,792.00p 0.09%
Reckitt Benckiser Group (RB.) 6,098.00p -0.33%
Coca-Cola HBC AG (CDI) (CCH) 2,769.00p -0.57%
Pearson (PSON) 584.30p -0.69%
Halma (HLMA) 2,157.00p -0.79%
National Grid (NG.) 1,016.20p -0.79%
ITV (ITV) 139.00p -0.89%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 583.40p -5.48%
Prudential (PRU) 1,344.00p -5.04%
Rio Tinto (RIO) 4,230.00p -5.01%
Carnival (CCL) 3,260.00p -4.99%
easyJet (EZJ) 1,405.00p -4.92%
InterContinental Hotels Group (IHG) 4,522.00p -4.91%
Burberry Group (BRBY) 2,000.00p -4.79%
Johnson Matthey (JMAT) 2,659.00p -4.73%
Anglo American (AAL) 2,031.50p -4.67%
Evraz (EVR) 365.70p -4.61%

FTSE 250 - Risers

Bakkavor Group (BAKK) 135.00p 2.24%
Euromoney Institutional Investor (ERM) 1,320.00p 1.21%
Fresnillo (FRES) 648.60p 0.35%
Computacenter (CCC) 1,812.00p 0.33%
Sophos Group (SOPH) 564.60p 0.25%
Sirius Minerals (SXX) 5.46p 0.18%
Millennium & Copthorne Hotels (MLC) 687.00p 0.00%
EI Group (EIG) 284.40p 0.00%
BBGI SICAV S.A. (DI) (BBGI) 169.00p 0.00%
Renishaw (RSW) 4,056.00p -0.05%

FTSE 250 - Fallers

Spirent Communications (SPT) 230.00p -6.63%
Kaz Minerals (KAZ) 453.70p -6.36%
Premier Oil (PMO) 106.65p -5.95%
Fidelity China Special Situations (FCSS) 223.00p -5.85%
RHI Magnesita N.V. (DI) (RHIM) 3,356.00p -5.71%
Micro Focus International (MCRO) 1,073.40p -4.97%
Ferrexpo (FXPO) 141.60p -4.96%
Future (FUTR) 1,466.00p -4.96%
Finablr (FIN) 93.50p -4.95%
Hilton Food Group (HFG) 1,076.00p -4.78%

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