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FTSE hits lowest in a year as coronavirus impact continues

By Lawrence Gash

Global indices suffer

London’s FTSE 100 Index closed at its lowest level in a whole year on Tuesday after a second successive day of losses.

At close the index tracking the performance of the London Stock Exchange’s largest 100 companies by market capitalisation fell by 1.94 per cent to stand at 7,017.88.

Bourses throughout Europe have suffered with the AEX in Amsterdam, the Dax in Frankfurt and the pan-European Euro Stoxx 50 falling more than 1 per cent.

While the Covid-19 epidemic started in late December affecting Chinese output, global supply chains and commodity markets, Western markets had not suffered significantly until Monday.

A sharp rise of cases in South Korea, Iran and Italy shook investors who had hoped the epidemic was relatively contained to China. As a result, the Euro Stoxx 600 suffered its largest drop since the Brexit referendum poll while the Dow Jones plunged more than 1,000 points or 3.56 per cent.

On Monday when an Iranian lawmaker accused the Iranian government of under-reporting the death toll in the city of Qom, Iran’s deputy health minister Iraj Harirchi stated: “I categorically deny this information. This is not the time for political confrontations. The coronavirus is a national problem.” A statement issued by the government on Tuesday morning confirmed that Harirchi had tested positive for coronavirus.

While the situation in Italy is less dramatic, other European nations have voiced their concerns after Italian prime minister prime minister admitted on Tuesday that a hospital in Lombardy had accidentally spread the virus by not adhering to strict safety protocols.

Unsurprisingly, tourism-dependent companies were among the hardest hit on the FTSE 100, with Carnival Cruises (CCL) falling 5.74 per cent, EasyJet falling 3.50 per cent and Intercontinental Hotels Group (IHG) falling 3.22 per cent. While the FTSE 250 contains more domestic firms than the FTSE 100 and thus could be less exposed to international risks and shutdowns, the index suffered almost as badly, falling 1.90 per cent to 20,715.97.

With the first cases being reported in Switzerland, Spain and Austria there are growing concerns that the virus will spread throughout Europe. In which case the economic contagion of the Chinese bug will only continue.

FURTHER READING: China takes steps to restart economy and get people back to work

FURTHER READING: Gold soars to seven-year high as coronavirus panic hits risk appetite

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