Investors lick wounds after bad week
Fiona Cincotta February 29, 2020 1:00 AM
• FTSE down over 12% on week • Oil below $50 • Treasury yield down to 2009 low • Gold declines 2.5% • Rolls Royce trades higher
- FTSE down over 12% on week
- Oil below $50
- Treasury yield down to 2009 low
- Gold declines 2.5%
- Rolls Royce trades higher
The FTSE brought a wrenchingly bad week to a close with a weekly decline of almost 13% after several days of panicked selling that had echoes of 2008. The tipping point came from the first coronavirus cases in the US and news that the country is now preparing for a larger scale outbreak, including looking into closing schools over the coming weeks. The Federal Reserve is already running through the various scenarios for the spread of the virus and is considering cutting rates if the outbreak reaches the level of a pandemic.
On the FTSE, airlines and travel operator TUI kept trading lower throughout the day but Scottish Mortgage Investment Trust which started the day with an 8.3% decline managed to soften the loss towards the close. The investment trust is heavily exposed to Chinese technology firms Tencent and Alibaba but has also suffered because of losses in Amazon and Netflix. Oil and mining firms also traded lower after Brent crude prices slipped below $49.
US indexes are also heading lower with the volatility index, the VIX, the only one benefiting from the current turmoil. There were almost no safe havens left as Treasury yields recorded the biggest daily decline since 2009 and even gold flashed red, down 2.5%. Losses on Wall Street were slightly less than those in Europe at the time of the London close but the markets there also moved into bear territory with weekly losses exceeding 10%.
Rolls Royce defies overall decline after upbeat outlook
Rolls Royce was a rare exception trading up 5.3% after it posted a positive outlook for the rest of the year despite the coronavirus. The company managed to increase operating profits by 25% and stem some of its losses, trimming them down from £1.2bn to £852m.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.