London open: FTSE tumbles again amid Covid-19 fears

London stocks slid in early trade on Monday, taking their cue from heavy losses in Asia as the Federal Reserve’s move to cut interest rates to near zero failed to assuage investors’ fears over the impact of the Covid-19 pandemic.

At 0840 GMT, the FTSE 100 was down 5.6% at 5,067.76, having earlier hit its lowest point since October 2011.

Overnight, the Federal Reserve cut interest rates to between 0.00% and 0.25% and announced the launch of a $700bn stimulus programme to help counter the impact of the coronavirus pandemic. The Fed said in a statement: "The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States.

"The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook.

The Fed also launched a dollar-swap plan in coordination with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, to boost liquidity in the US dollar.

The move sent Asian markets sharply lower.

Neil Wilson, chief market analyst at Markets.com, said: "The Federal Reserve has panicked. It didn't just fire its bazooka, it dropped an atom bomb of liquidity and monetary stimulus.

"The chaos continues: global equity benchmarks are in full sell-off mode as the near-complete shutdown of Europe gathers pace and markets largely shrug off the Federal Reserve's monetary easing as well as a globally-coordinated central bank effort to ease dollar liquidity.

"Make no mistake, what the Federal Reserve did last night was remarkable, but the global economy is grinding to a halt - no amount of central bank liquidity can contend with that. Markets are pricing for 2020 earnings to tumble and for a global recession. The kind of damage will be lasting in many sectors, far longer lasting than the virus outbreak itself."

Dismal Chinese industrial production, fixed asset investment and retail sales data also weighed on sentiment. Spreadex analyst Connor Campbell said the numbers were "scary enough to start a horror film franchise".

Industrial production slumped 13.5% in February, while fixed asset investment tumbled 24.5% and retail sales were down a whopping 20.5%.

"Analysts had been expecting a 3.0% fall in industrial production, a 2.0% drop in fixed asset investment and a 4.0% contraction in retail sales," said Campbell. "One could argue those numbers aren’t exactly surprising, and that the estimates always looked a bit suspect. However, that failed to curb the blow for investors."

In equity markets, travel and leisure stocks suffered the brunt of the selling yet again. TUI was the standout loser on the FTSE 100, having announced late on Sunday that it was applying for state aid guarantees as it suspended the vast majority of its travel operations and withdrew 2020 guidance due to the coronavirus.

Budget airline easyJet was weaker after saying that government backing would be needed to save the European airline industry from the impact of the coronavirus as it warned it may have to ground a majority of its fleet. The budget carrier said it had made further significant cancellations as European countries moved into lockdown, adding that these would "continue on a rolling basis for the foreseeable future".

British Airways and Iberia parent IAG slumped after saying chief executive officer Willie Walsh will temporarily postpone his retirement as the company rides out the turbulence from the coronavirus epidemic.

Flutter Entertainment shares fell sharply after the Paddy Power Betfair owner warned that it would take a hit of up to £110m to earnings if sports fixing restrictions due to the coronavirus remain in place until the end of August. William Hill and GVC Holdings were also firmly in the red.

Premier Inn owner Whitbread was under the cosh, while low-cost Central and Eastern European airline Wizz Air was in freefall as it suspended all flights to and from Poland until further notice due to travel restrictions imposed by the county in light of the pandemic.

There were no risers on the top-flight index, but Dettol maker Reckitt Benckiser suffered the least heavy losses as panic-stricken shoppers stocked up on cleaning products.

Market Movers

FTSE 100 (UKX) 5,067.76 -5.56%
FTSE 250 (MCX) 14,556.66 -6.46%
techMARK (TASX) 2,995.75 -5.09%

FTSE 100 - Risers

Reckitt Benckiser Group (RB.) 5,472.00p 1.82%
GlaxoSmithKline (GSK) 1,383.20p -1.40%
Ocado Group (OCDO) 1,164.50p -1.56%
Imperial Brands (IMB) 1,354.20p -1.77%
Sainsbury (J) (SBRY) 175.70p -1.90%
AstraZeneca (AZN) 6,174.00p -2.25%
Unilever (ULVR) 3,759.50p -2.46%
Morrison (Wm) Supermarkets (MRW) 166.50p -2.63%
Polymetal International (POLY) 1,184.50p -3.11%
Admiral Group (ADM) 1,946.50p -3.21%

FTSE 100 - Fallers

TUI AG Reg Shs (DI) (TUI) 243.00p -32.50%
easyJet (EZJ) 564.60p -28.24%
International Consolidated Airlines Group SA (CDI) (IAG) 270.10p -22.89%
Flutter Entertainment (FLTR) 5,156.00p -20.38%
Schroders (SDR) 1,941.00p -12.84%
Whitbread (WTB) 2,268.00p -12.06%
Compass Group (CPG) 1,054.50p -11.35%
Melrose Industries (MRO) 124.50p -11.07%
Kingfisher (KGF) 121.60p -10.92%
3i Group (III) 653.00p -10.62%

FTSE 250 - Risers

Sabre Insurance Group (SBRE) 310.00p 27.84%
Vivo Energy (VVO) 93.60p 4.93%
Bakkavor Group (BAKK) 80.80p 3.86%
Energean Oil & Gas (ENOG) 366.50p 1.95%
UK Commercial Property Reit Limited (UKCM) 70.60p 0.86%
NextEnergy Solar Fund Limited Red (NESF) 109.50p 0.46%
Daejan Holdings (DJAN) 7,970.00p 0.00%
LXI Reit (LXI) 116.00p 0.00%
Sanne Group (SNN) 478.50p 0.00%
Finablr (FIN) 11.97p 0.00%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 1,500.00p -45.16%
William Hill (WMH) 66.70p -24.68%
Aston Martin Lagonda Global Holdings (AML) 161.50p -21.60%
GVC Holdings (GVC) 380.90p -19.35%
Marston's (MARS) 41.94p -19.11%
National Express Group (NEX) 196.10p -18.63%
Cineworld Group (CINE) 36.41p -17.62%
Capita (CPI) 29.87p -16.14%
WH Smith (SMWH) 938.50p -16.13%
Restaurant Group (RTN) 41.96p -15.47%