The FTSE 100 fell today as European stocks slipped into the red on news that coronavirus cases outside of mainland China are escalating.
London’s blue-chip index dropped 0.63 per cent in early trading to leave the FTSE 100 at 7,390 points.
European stocks also retreated into the red. Germany’s Dax dipped 0.2 per cent while France’s Cac tumbled 0.4 per cent.
“The FTSE 100 took its cue from weakness in the US and Asia overnight, falling towards 7,400 at the open,” AJ Bell investment director Russ Mould said.
Luxury fashion house Burberry, which has already warned of the impact of coronavirus, slipped 2.2 per cent to lead the downward trend.
“Commodity prices, which have typically been ahead of equities in factoring in the economic impact implied by coronavirus, were also weak,” Mould added.
But investors flocked to gold as the classic safe haven became more attractive amid stock market uncertainty.
“All the stops are out for gold and momentum buying is pushing up prices even further,” Neil Wilson, chief market analyst at Markets.com, said.
“We’re seeing a very rapid march higher to north of $1,630, knocking out a fresh seven-year high. Next major target appears to be $1,690.”
It came as Singapore and Japan both reported 85 cases of coronavirus and South Korea experienced a fivefold rise to hit 150 confirmed cases.
That prompted Asian stocks to tumble overnight. Hong Kong’s Hang Seng index dropped 1.1 per cent and Japan’s Nikkei slipped 0.4 per cent.
European stocks ‘waking up to coronavirus’
Mould added that markets are becoming more aware of the impact of the coronavirus outbreak on European stocks.
“While the number of new cases of coronavirus continues to slow in China, the spread outside the country is escalating and it seems the market is waking up to the impact on both individual companies and the wider economy,” he said.
“Profit warnings linked to the health crisis, as companies are either hit by slowing consumer demand in China or impact on their supply chain, are starting to trickle out.”
He pointed to Apple’s revenue warning as the most high profile of such warnings. But Chinese car sales also plummeted 92 per cent in February due to dealership closures. And Jaguar Land Rover and Nissan have both reported hits from coronavirus. Retailers like Burberry have also warned of the virus’ impact on sales.