FTSE 100 tumbles below 7,000 points as Diageo warns of £200m coronavirus hit – business live

European stock markets are now sliding deeper and deeper into the red.

Germany’s DAX has tumbled by another 2.5%, while the UK’s FTSE 100 is now 1.5%, or 106 points, at 6910 (still a one-year low).

It’s turning into a really grim few days for the markets. The EU-wide Stoxx 600 index has lost over 9% since last Wednesday, falling steadily as Covid-19 infections and deaths have kept rising.

Russ Mould, investment director at stockbroker AJ Bell, says investors are now realising that Covid-19 will have a serious impact on corporate profits, as supply chains are hit and demand falls.

European shares were also under significant pressure as several countries on the continent announce their first cases. Germany’s DAX index drops 1.2%, overnight Japan’s Nikkei 225 index was down 0.8%.

The correction for equities reflects the reality that the impact of this outbreak is likely to be far-reaching and lead to pressure on company’s revenue and earnings. Alcoholic drinks maker Diageo becoming the latest high-profile company to flag an impact this morning.

Shares in Diageo have slid by 2.5% this morning, after it warned Covid-19 could wipe out £200m of profits.

Neil Wilson of Markets.com says Diageo has highlighted an important issue — sales lost during the coronavirus crisis can’t always be clawed back:

The problem is for the likes of Diageo is that once the consumption picks up again in affected regions in China and beyond, you don’t then go and buy two bottles of Scotch instead of your normal one (most people anyway).

The selloff in European markets is accelerating again.

In London, the FTSE 100 has now shed another 102 points, or 1.5%, in its third day of big losses in a row.

This pushes the blue-chip index down to a fresh one-year low of 6915.

Other European markets are also slumping, with the Stoxx 600 index down 2% – to its lowest level since October 31.

UK travel catering firm SSP Group has been hit hard by the coronavirus disruption.

SSP runs restaurants and bars at airports and railway stations around the world — so the transport restrictions imposed in Asia to combat Covid-19 are hurting sales badly.

It expects to suffer a 50% plunge in sales across the Asia-Pacific region in February, which will cost it £4-£5m in operating profits.

SSP tells shareholders that there’s been a major drop in traffic levels:

In terms of the impact at the airports in which we operate across the region, in China we have seen sharp declines in both domestic and international air passenger numbers, which are currently running c. 90% lower YOY( year-on-year). In Hong Kong passenger numbers are c. 70% lower YOY and across a number of our other Asia Pacific countries, including Singapore, Thailand, Taiwan and the Philippines, passenger numbers are between 25% and 30% lower YOY.

Elsewhere, we have also seen some impact at our airports in Australia, as well as at major travel hubs in the Middle East and India, although to date this has been less severe.

French food group Danone has also warned that the coronavirus crisis is hurting its business.

The maker of Evian and Volvic bottled water, and Activia, expects to lose around €100m in sales, mostly at its “Waters China” business.

That will wipe out Danone’s revenue growth in the current quarter, leaving like-for-like sales “broadly flat”.

This has forced Danone to cut its sales growth targets – to 2-4%, down from 4-5%.

CEO Emmanuel Faber says:

We start this year under the uncertain clouds of the coronavirus. Our priority is on the health and safety of our employees, business partners, customers and the communities in which we operate, hand in hand with the work of authorities.

I would like in particular to commend and deeply thank our teams in China for their incredible commitment to their mission serving relentlessly families, parents, babies and elderlies despite the difficult conditions. Let me express my support and empathy for the difficulties and challenges they face and my confidence that life will return to normal in China and beyond.

坚强, 中国 Stay strong China.

The FTSE 100 has now lost more than 5% of its value this week — as it plunged to a one-year low this morning.

Newsflash: The FTSE 100 share index has hit a new one-year low at the start of trading.

Covid-19 worries have pushed the blue-chip index down by another 39 points, or 0.5%, to 6978. That’s its lowest level since February 2019.

Travel companies are leading the fallers, again, with holiday firm TUI and budget airline easyJet both losing 3%.

This means the FTSE 100 has lost more than £100bn of value since the start of this week, as City investors have been spooked by the surge in coronavirus infections around the world.

Newsflash: the coronavirus outbreak will hit its sales and profits at drinks giant Diageo this year.

Diageo, the company behind Guinness, Smirnoff, Johnnie Walker, Baileys and Talisker, has warned the City that Covid-19 will have an adverse impact on its operations this year.

Diageo estimates that the ongoing crisis will knock £225m to £325m off its organic net sales this year. That will wipe between £140m to £200m off organic operating profits, it reckons.

Diageo’s statement outlines how business has been hit hard in Greater China in recent weeks:

Bars and restaurants have largely been closed and there has been a substantial reduction in banqueting. As the majority of consumption is in the on-trade, we have seen significant disruption since the end of January which we expect to last at least into March.

This disruption has now spread across the region, it adds:

The outbreak in several other Asian countries, especially South Korea, Japan and Thailand, has led to events being postponed, a reduction in conferences and banquets, and a drop in tourism which have all impacted on-trade consumption.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The coronavirus selloff shows no signs of abating, as investors around the world are gripped with fears of a global pandemic — and a major slowdown.

European stock markets are heading for fresh falls today, which will drive Britain’s stock market down to a one-year low.

The FTSE 100 is currently being called down 60 points at 6957, a drop of almost 1%. It has already shed 5% of its value this week, after two days of heavy selling.

The escalating virus crisis sparked another heavy day of losses on Wall Street last night, where the Dow fell by 879 points – on top of Monday’s 1,000 plunge.

Overnight, a World Health Organisation expert warned that countries outside China are “simply not ready” for a pandemic — as new cases are reported in Iran, South Korea, Italy, Austria, and Croatia.

WHO’s Bruce Aylward warned:

“You have to be ready to manage this at a larger scale … and it has to be done fast.”

That warning helped to trigger another day of heavy losses in Asia-Pacific markets. Australia’s S&P/ASX 200 index has shed another 2.3%, on fears that its economy will take a big hit from the slowdown in China.

South Korea has shed another 1.5%, with China’s CSI 300 down 1.2%.

Our main coronavirus live blog has all the details:

Jasper Lawler of London Capital Group reports that investors are rethinking how well, or badly, the global economy will perform this year.

We’ve now had two seismic daily declines on global stock markets. Short term traders may well choose to grit their teeth for a short-covering rally but we’re getting the impression institutional investors are materially reassessing their outlook for stocks.

The Dow and S&P 500 have just notched up the worst 2-day decline since February 2018 with the Dow giving up over 1900 points in the process. The Nasdaq has closed in the red for the year. Alarmingly, it has been reported that Only 5 US states have the capacity to test for the coronavirus.

European shares look set for a lower open with the number of cases in China moving higher again. There are some stark instances of business being affected now – Royal Caribbean has cancelled 30 cruises in Southeast Asia. Nobody’s willing to ‘catch a falling knife’ with these kinds of headlines. Benchmarks in Europe look in bad shape.

The agenda

• 3pm: US home sales data for January
• 3.30pm: US oil inventory figures