The measure of calm that descended on London markets in early trade on Tuesday failed to last with UK shares diving into the red again by late morning.
At 11.40m, the benchmark FTSE 100 had slumped 0.8% to 7,100.49, while the FTSE 250 falgged by a similar margin at 20,951.
This followed Monday’s huge sell-off and heavy falls in Far East stock markets overnight. Shares in Japan fell sharply as investors continue to be spooked by the spread of the coronavirus following a public holiday on Monday.
Japan's Nikkei 225 index lost 4.5% when it re-opened, although it managed to plug some of those losses by the close of trading to end 3.3% lower.
The slump followed a global stock market plunge on Monday with Wall Street and London markets suffering some of their sharpest drops since January 2016. The three main indexes in the US fell by between 3% and 4%, while the UK's FTSE 100 closed 3.3% lower.
PRU TARGETED BY HEDGE FUND
In corporate news, insurance giant Prudential (PRU) found itself in the sights of a US hedge fund, which wants to close the Pru’s head office.
Third Point, a hedge fund run by shareholder activist Daniel Loeb, has reportedly taken a £1.6bn stake in the UK insurer and claims the Pru could save £200m a year by shutting the doors to its UK HQ, news that investors appear to support on paper, lifting the Pru’s share price by 2.6% in early deals to £14.58.
Third Point has handed the Pru’s top brass a letter in which it sets out a series of demands. Prudential confirmed on Tuesday that it has opened talks with Third Point and plans to update shareholders on 11 March, when it reports full year results.
Defence contractor Meggitt (MGGT) is the FTSE 100’s biggest faller after falling 3.6% to 573p following the announcement that chairman Nigel Rudd plans to stand down to spend more time on other businesses and interests.
Rudd, who was appointed chairman in 2015, will stay in position until a replacement is found.
The announcement came alongside full year results that showed improvements in profits and free cash flow and lower net debt of £911.2m.
WEAKENING DEMAND
Subdued trading hit chemicals company Croda (CRDA) after it reported a lower annual profit and said its performance in the current year would be second half weighted, frequently a leading profit miss indicator.
Building materials supplier SIG (SHI) slumped 10% to 75p following the shock departures of chief executive Meinie Oldersma and chief financial officer Nick Maddock. SIG downgraded its earnings guidance last month and said on Monday that adverse trading trends were continuing.
Engineering company Ricardo (RCDO) sank 15% to 646p as it reported a 19% fall in first half profit and warned that its full year performance would be hurt materially by the impact of the coronavirus on the automotive and rail sectors.
Investment trust Pollen Street Secured Lending (PSSL) saw its share price rally 7% to 886p after revealing talks about a possible takeover of the fund by Waterfall Asset Management.
Real estate investment firm Hammerson (HMSO) reported an 11.2% drop in net rental income for 2019 to £308.5m, from £347.5m in the previous year. The property business lamented a difficult retail environment in the UK.
Hammerson’s pre-tax losses rose to £573.8m, up from £173.3m in 2018. The firm said occupancy of retail spaces continued to be high at 97.2%, the same as in 2018. Hammerson shares nudged about 1% higher to 224.2p.
TESCO SELLS CHINA STAKE
Supermarket giant Tesco (TSCO) stayed flat at 249.4p after it sold its 20% share in Chinese retailer Gain Land to joint venture partner China Resources, generating cash proceeds of around £275m.
AstraZeneca (AZN) edged back 6p to £74.40, having sold the global rights to a constipation drug, excluding Europe, Canada and Israel, to RedHill Biopharma for $67.5m.
Oil services company Petrofrac (PFC) reversed earlier losses to run 1.3% ahead at 363.1p as it reported a rise in annual profit that was nevertheless limited by falling revenue and substantial write-downs.
Bank notes printer De La Rue (DLAR) jumped 16% 141.4p after detailing a turnaround plan designed to slash cost and bolster profits.
Specialist product manufacturer Morgan Advanced Materials (MGAM) added 1% to 292p after booking a 16% rise in annual profit, as sales inched higher and cost efficiencies bolstered margins.
