UK stocks stumble as Europe’s markets flatline

London opened slightly down on Wednesday, while European shares were slightly up after China closed the day on a high.

Global markets have been roiled by the new coronavirus, but investors are hopeful of government stimulus becoming more widespread [Toby Melville/Reuters]
Global markets have been roiled by the new coronavirus, but investors are hopeful of government stimulus becoming more widespread [Toby Melville/Reuters]

United Kingdom stocks inched lower in early trading on Wednesday as investors worried about the extent of the global economic fallout from the coronavirus epidemic after a surprise interest rate cut by the US Federal Reserve.

The blue-chip index fell 0.2 percent after rising for two straight days, while the domestically focused mid-cap index slipped 0.3 percent.

Wall Street had tumbled overnight as the unexpected move by the Fed alarmed rather than soothing investors worried about economic growth amid the fast-spreading virus outbreak.

Among individual stocks, shopping mall operator Intu slumped 41.2 percent as it scrapped a planned equity raise and said there was a risk it might breach some of its debt covenants this year.

British life insurer Legal & General tumbled 2.6 percent to the bottom of the FTSE 100, despite posting a higher-than-expected rise in 2019 operating profit.



Across the Channel, European shares struggled for direction as investors wondered if the European Central Bank (ECB) and eurozone governments would greenlight stimulus measures after the US Federal Reserve’s interest rate cut.

The Fed’s rate cut by 50 basis points on Tuesday sent Wall Street tumbling, magnifying the extent of the coronavirus fallout. The pan-European STOXX 600 index rose 0.2 percent, with gains capped by dismal data showing China’s services sector had its worst month on record in February – leading economists to call for swift support to avoid mass bankruptcies.

All the main European indexes were slightly higher, but Italian shares moved up only 0.1 percent. Italy’s health authorities said they may set up a new quarantine “red zone” to try to contain the outbreak in Europe’s worst-hit country after the death toll and the number of cases jumped.

Traders now see a 90 percent chance the ECB will cut rates next week, while policymaker Francois Villeroy de Galhau on Tuesday called on governments for more fiscal help.


Further afield, Chinese stocks settled higher on Wednesday as investors hoped for more domestic policy stimulus.


The blue-chip CSI300 index rose 0.6 percent to 4,115.05, while the Shanghai Composite Index gained 0.6 percent to 3,011.67 points.

China, which has already rolled out various measures to support the virus-hit economy, kept short-term borrowing costs steady on Wednesday, shrugging off the surprise US rate cut. However, markets widely believe Chinese policymakers will continue their efforts to lower financing costs for businesses.

The People’s Bank of China’s approach is not closely following the Fed’s move, as it will take its own proactive steps depending on the situation, said Xiao Shijun, an analyst with Guodu Securities. 

Meanwhile, China reported another drop in new coronavirus cases, further bolstering risk sentiment in the region.

The largest percentage gainers in the main Shanghai Composite index were Nanjing Chixia Development Co Ltd, up 10.15 percent, followed by Baoding Tianwei Baobian Electric Co Ltd, which was 10.07 percent higher, and Lushang Health Industry Development Co Ltd, up 10.06 percent. 

Source : News Agencies

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