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The FTSE 100 faced its biggest one-day percentage loss in months on Monday, as the index made up heavily of international companies was hit hard by news that China’s deadly coronavirus is spreading rapidly.
The index UKX, -2.03% slid 2.2% to 7,417.56, with the pound flat at $1.3082, which would mark the biggest loss since early October 2019. It climbed 1% on Friday, and added 1.1% last week. But the index closed before the finish of Wall Street’s trading day on Friday, when investors sold equities on coronavirus headlines.
“The heavy weighting of the index toward the resources sector has exacerbated the situation, given how these companies’ fortunes are closely tied to the commodity-hungry Chinese economy,” Russ Mould, investment director at stockbroker AJ Bell, told clients in a note.
U.S. stock futures fell sharply on Monday amid concerns over the rapidly spreading coronavirus, which usually causes respiratory illness. China extended this week’s Lunar New Year holiday, among other measures aimed at halting the spread of the coronavirus, as the death count rose to at least 80, and the number of those infected neared 3,000. The U.S., France and Japan are among countries that have reported confirmed cases.
A worrying detail emerged as Wuhan’s mayor Zhou Xianwang said that five million people left the city before the travel ban was imposed. The virus is believed to have started in the Chinese city.
“The difficulty for investors is that it is extremely difficult to predict what turn events might take in the coming days and weeks. Until there are signs the virus has been contained equities look set to be dogged by uncertainty,” said Mould. “Previous experience of global health crises does at least suggest there could be a fairly rapid recovery once the number of cases has peaked.”
Mining stocks led the losses, followed closely by banks and major oil companies, though virtually every sector was in the red. China is a big purchaser of natural resources, and Anglo American AAL, -4.36%, Rio Tinto RIO, -1.95% RIO, -4.18% and BHP Group BHP, -4.04% all fell by over 4%.
Shares in BP BP, -0.18% BP, -1.48% lost 2% as crude prices slid on concerns about how the virus might impact China’s economy and weaken its demand for that commodity as well.
Heavily-weighted HSBC Holdings HSBA, -3.02% HSBC, -0.53% tumbled 3.3%.
