UK stocks follow Asia’s tumble on coronavirus fears

Rio Tinto and Diageo saw the biggest falls as trading opened in London.

London Stock Exchange - reuters
The knock-on effect of coronavirus has seen reduced spending around the world, threatening global economic growth [File: Henry Nicholls/Pool/Reuters]

United Kingdom shares tumbled for a fifth straight session on Wednesday, as a warning from the United States health officials to brace for a coronavirus pandemic raised fears of more global supply chain problems.

Rio Tinto and Diageo became the latest multinational firms roiled by the outbreak.

The Anglo-Australian miner fell 1.4 percent after saying it would see a short-term impact from the epidemic, which has infected about 80,000 people and killed more than 2,700. The wider mining sector was down 1.8 percent. 

Diageo, the world’s biggest spirits company, tumbled 3 percent as it said the epidemic could knock up to $260m off its profit in 2020.

“When you have the likes of Diageo talking numbers and how this is going to affect profit and loss, in market terms, the reality factor is in your face,” said Keith Temperton, a trader at Tavira Securities.

“I don’t see that reversing until we see evidence of a peak in [virus] numbers and that’s not going to happen until quite some time.”

London’s export-laden FTSE 100 slid 2 percent to a one-year low, while the domestically focussed mid-cap index shed 2.3 percent.


EasyJet, British Airways owner IAG and Burberry Group were among the biggest decliners.

The rapid spread of the deadly virus outside China sparked a sell-off that has erased about $3 trillion from the value of global stocks in the past four days.

European stock markets lost 2.7 percent on Wednesday, as the virus spread to countries including Algeria, Austria, Croatia, Italy, Romania, Spain and Switzerland.

There have been 11 confirmed deaths from coronavirus in Italy, the hub of the European outbreak.

Late on Tuesday, the US Centers for Disease Control and Prevention alerted Americans to begin preparing for a likely pandemic.

Although the disease is believed to have peaked in China, where it originated late last year, the resulting hit to factory output and consumer spending has threatened global economic growth in 2020.

A recent Reuters news agency poll found that most large economies in Asia are expected to either slow significantly, halt or shrink outright in the current quarter.

Frankie & Benny’s chain owner Restaurant Group fell 4.8 percent after saying it would reduce the number of sites in its leisure business and temporarily suspend its dividend.

Among the few gainers, engineering firm Weir Group jumped 7.8 percent to the top of the mid-cap index after posting a higher annual profit.

Source: Reuters