The FTSE 100 tumbled on Monday as Italy’s lockdown and a sharp rise in cases in South Korea fueled market fears over the coronavirus outbreak becoming a pandemic.
The UK’s benchmark index plunged close on 3% to 7,187.17, worse than Asian markets overnight. The Hang Seng in Hong Kong fell 1.8% to 26,820 and the Shanghai Composite in China fell 0.3% to 3,031.
Though, as is usually the case in times of adversity, the news was good for gold which rose 2% to $1,678 per ounce.
On the other hand oil prices took the news badly with Brent crude futures down 3.1% to $56.68 per barrel.
AIRLINES TUMBLE
In terms of stocks, airlines appeared to be the worst affected with the market worried over the virus’s spread to Italy potentially affecting bookings for summer holidays.
Package holiday operator TUI (TUI) was the biggest faller of the morning, plunging 10.5% to 761p, followed by low-cost airlines EasyJet (EZJ) which fell 9.7% to £13.61 and Ryanair (RYA) which tumbled 8.7% to €13.98.
British Airways owner International Consolidated Airlines (IAG) slumped 8% to 573p while Wizz Air (WIZZ) escaped comparatively lightly, falling 5.6% to £41.57.
VIRUS WARNING OVERSHADOWS STRONG ABF UPDATE
Virus fears also found their way into company updates, with Primark owner Associated British Foods (ABF) warning that if delays to production in its Chinese factories were prolonged ‘the risk of supply shortages on some lines later this financial year' would increase.
The warning overshadowed what was otherwise a strong update, with half year sales growth for the group and adjusted operating profit expected to be ahead of last year on both a lease-adjusted and a reported basis.
The firm’s shares dropped 1.6% to £25.42 shortly after the market open.
BUNZL GAINS AS IT BEATS EXPECTATIONS
One company with good news was outsourcing firm Bunzl (BNZL), which rose 1.4% to £19.74 as it beat full year profit expectations.
In its results for the year to 31 December, Bunzl reported a 2.4% rise in adjusted pre-tax profit to £578.2m, with revenues up 1% to £9.3bn.
Bunzl recommended a final dividend of 35.8p, taking the total dividend for the year to 51.3p, up 2.2% compared to 2018.
REACH RISES AS IT SWINGS TO PROFIT
Daily Mirror and Daily Express newspaper publisher Reach (RCH) also defied the gloom, gaining 3.4% to 180p as cost cutting offset falling sales to help it swing to a full-year profit.
In the 52 weeks to 29 December, Reach reported a statutory pre-tax profit of £120.9m, compared to a £119.9m statutory pre-tax loss the year before.
Reach also said it was targeting a rise to 7m registered customers by the end of 2022, up from less than 1m at the end of 2019, as part of a strategy update.
Shares in estate agent Countrywide (CWD) jumped 4.8% to 369p after it confirmed it was in merger talks.
Following press reports over the weekend, the company confirmed it is in discussions with LSL Property Services (LSL) about a possible £470m all-share merger.
DECHRA DROPS DESPITE DOUBLING PROFIT
Veterinary pharmaceuticals company Dechra Pharmaceuticals (DPH) shed 2.6% to £27.28, even as its half-yearly profit more than doubled.
For the six months to 31 December, pre-tax profit jumped to £19.5m from £9m in the same period the previous year, as revenue rose 7.4% to £485m.
But it also warned about supply challenges in its North America business.
TRISTEL SEES VIRUS OPPORTUNITY
Meanwhile infection prevention product manufacturer Tristel (TSTL) rallied 4.8% to 414p as it reported a 25% rise in first-half profit that it said exceeded its expectations.
Tristel also said the coronavirus outbreak would be a ‘powerful influence’ on global healthcare systems and therefore greater investment in its products.
Chief executive Paul Swinney said, ‘As a globally recognised infection prevention brand, with some of the world's best-known disinfection technology, there are significant macro factors that will support Tristel's continued progress.’
