Alibaba and JCB hit by coronavirus problems as oil demand slashed - as it happened
Rolling coverage of the latest economic and financial news, as e-commerce giant Alibaba, digger maker JCB and fashion chain Ralph Lauren warn about coronavirus impact
- Latest: Alibaba says Covid-19 is hurting business
- Pound jumps as Javid quits
- IEA slashes oil demand forecasts
- EU: Coronavirus is major downside risk
- Introduction: Euro hits 33-month low
- Markets fall as virus cases jump
5.03pm GMT
Finally, European stock markets have closed for the day, and it's a rather mixed picture.
Britain's FTSE 100 ended 82 points lower, or over 1%. Stocks were hit by the stronger pound, as traders anticipate a splurge of growth-friendly measures in next month's budget.
The cruse of the coronavirus in China is clobbering the FTSE 100 as some of the biggest fallers on the index are connected to the country in question.
China's the world's largest importer of oil so the renewed fears about the health crisis have hit stocks like BP and Royal Dutch Shell. Mining stocks such as BHP, Rio Tinto as well as Anglo American are lower too. It has been a double whammy for the FTSE 100 as the drive higher in sterling has dented internationally focused stocks like GlaxoSmithKline, AstraZeneca, plus Unilever.
4.12pm GMT
JCB, the UK maker of yellow diggers, is cutting production and working hours at its UK factories as it faces component shortages from China.
JCB is planning to cut working hours for around 4,000 employees from 39 hours to just 34 from next Monday. Overtime has also been suspended. Staff won't take a pay cut, though - they'll have to work the hours back later this year.
"The disruption to the component supply chain in the UK comes at a time when demand for JCB products is very strong, so while this course of action is very unfortunate, it is absolutely necessary to protect the business and our skill base.
"Production in the UK has so far been unaffected by the situation in China. However, more than 25% of JCB's suppliers in China remain closed and those that have reopened are working at reduced capacity and are struggling to make shipments.
2.42pm GMT
The New York stock market has opened in the red, as traders respond to today's jump in coronavirus cases and deaths.
2.38pm GMT
Economists at HSBC have cut their forecasts for China's economic growth in the current quarter - for many of the reasons cited by Alibaba today.
Reuters has the details:
HSBC said on Thursday it had lowered its first-quarter forecast for mainland China's economic growth to 4.1% year-on-year from 5.8% due to the fallout from coronavirus.
The bank also cut its China full-year growth forecast to 5.3% from 5.8%, adding the impact was already starting to be felt in tourism, trade, supply chains and elsewhere.
2.08pm GMT
CEO Daniel Zhang also revealed that Alibaba has been procuring medical supplies from around the world, and donated more than 40 million units to Wuhan and other affected cities (that's via Yahoo! Finance)
Zhang adds that Alibaba are "monitoring the challenge and identifying opportunity as the situation evolves."
1.27pm GMT
Newsflash: The coronavirus outbreak is a "Black Swan event' which is having a 'significant impact' on China's economy, according to its biggest company.
1.12pm GMT
Newsflash: US fashion group Ralph Lauren has warned that its profits will be hurt by the coronavirus crisis.
"Our hearts are with the many impacted by this virus. Our number one priority is keeping our teams, partners and consumers safe."
12.50pm GMT
The City has responded to Sajid Javid's shock resignation by driving sterling to a two month high.
The pound has hit a1.20 against the euro for the first time since December's election.
We already thought that the Budget on 11th March would involve an extra loosening in fiscal policy worth 0.5% of GDP, which coming on top of the extra government spending announced in September 2019 would mean a fiscal boost of 1.0% is in the pipeline.
It's now possible that the Budget will provide a bigger bang.
12.24pm GMT
Back in the City, investors are digesting the shock news that Sajid Javid has resigned as Britain's finance minister.
Javid has quit, it seems, after refusing to sack his officials and work with a team from number 10.
The Rt Hon Rishi Sunak MP @RishiSunak has been appointed Chancellor of the Exchequer @HMTreasury pic.twitter.com/OTYOkujnbo
Like the old chancellor, the new one Rishi Sunak has a City background: ex Goldman Sachs analyst, also worked at Sir Chris Hohn's TCI hedge fund
'No self-respecting chancellor would accept those terms', says source close to Javid - https://t.co/1yzRyJdUcg
12.10pm GMT
Today's coronavirus gloom is going to hit Wall Street, and push stocks down from this week's record highs:
STOCKS PREMARKET
-Dow down 200 points
-Nasdaq down 71.25
-S&P down 21.75
This is what's moving the markets this morning:https://t.co/AEizJvIodg
11.42am GMT
Financial data firm MSCI has warned that coronavirus could have a much bigger impact on the global economy, and the markets, than SARS back in 2013.
In a new report, they point out that China's share of the world economy is much more significant, so companies across the globe will feel a knock-on impact.
The number of people infected and affected by the coronavirus continues to grow globally. Governments, as well as agencies such as the World Health Organization, are working tirelessly to contain, and ultimately defeat the virus. In China, local governments have locked down cities and businesses and restricted travel. And the general public has adopted voluntary home quarantine. The human toll has been steep.
As with many crises, the repercussions of the coronavirus can also be felt in the global economy and the financial markets. Many observers compare the coronavirus to the 2003 SARS epidemic. While this can provide useful insight, there are differences between the two periods to consider. China is a much bigger part of the global economy and markets than it was 17 years ago. China's share of global trade rose to 11% in 2018 from 5% in 2003, based on World Bank statistics. Meanwhile, its share of the MSCI Emerging Markets Index has risen to 34.3% from 7.86% in 2003.
11.21am GMT
The stock market selloff is accelerating, with European markets down 1% and the UK's FTSE 100 down 1.5%.
If the change in methodology does result in a rise in the growth rate of reported cases, market sentiment will inevitably deteriorate, reversing the more upbeat tone of recent days as markets had become increasingly reassured that the virus will soon plateau. Markets will be very closely watching the number of new reported cases over the coming days.
Overhanging the latest report is also the suspicion that authorities have been supressing news of the true severity of the infection, potentially re-inflaming the spread of fear via social media once again. As long as investors are questioning the credibility of "official" virus-related news flow, they will struggle to regain confidence in any potential growth rebound.
11.08am GMT
Cailin Birch, global economist at The Economist Intelligence Unit, predicts that oil prices will remain at current low levels until the summer -- and longer if the coronavirus crisis worsens.
Here's her take on the IEA oil demand forecasts:
10.40am GMT
Here's some reaction to the IEA's prediction that oil demand will fall sharply this quarter:
BREAKING Oil demand will fall in 1Q due to coronavirus impact, the first quarterly contraction since the 2008-09 global financial crisis, the @IEA says. Also, IEA cuts global demand growth for 2020 to a paltry 825,000 b/d, the lowest annual since 2011 | #OOTT pic.twitter.com/Y1PEK0sLjT
Global oil demand in the first quarter this year will be just 100,000 b/d more than it was in the same quarter *two years* ago, according to the IEA. #oott #coronavirus pic.twitter.com/Js4J178byZ
10.31am GMT
Germany, France and Italy -- the EU's three biggest countries -- are expected to grow the slowest this year, the EC adds.
Growth forecast for 2020 (%):
4.0
3.8
3.6
3.3
3.2
2.9
2.8
2.7
2.7
2.6
2.6
2.4
2.3
2.2
2.2
2.1
1.7
1.6
1.5
1.5
1.4
1.3
1.3
1.2
1.2
1.1
1.1
0.3
Winter #ECForecast ahttps://t.co/6YKCQ5R3uW
10.25am GMT
NEWSFLASH: The EU has warned that the coronavirus crisis is a "key downside risk" to the European economy.
In its new Winter Forecast, the EU warns that the Covid-19 outbreak could hurt growth this year.
The outbreak and spread of the '2019-nCoV' coronavirus and its impact on public health, human lives and economic activity has been a source of mounting concern.
It has spurred uncertainty about the short-term prospects of the Chinese economy and about the degree of disruption across borders at a moment in which global manufacturing activity remains at a cyclical low. The baseline assumption is that the outbreak peaks in the first quarter, with relatively limited global spillovers. The duration of the outbreak, and of the containment measures enacted, are a key downside risk. The longer it lasts, the higher the likelihood of knock-on effects on economic sentiment and global financing conditions.
#BREAKING EU sees growth steady at 1.2% but warns of coronavirus pic.twitter.com/NRjMt9o2mv
10.19am GMT
European stock markets are falling deeper into the red.
The FTSE 100 is now down by 1.5%, or 113 points, following the IEA's gloomy predictions of falling oil demand.
10.04am GMT
Crude oil prices are down 1% today, as the IEA's warning adds to coronavirus gloom.
The IEA points out in today's report that prices have already fallen sharply:
The impact of Covid-19 for oil prices have been sharp: Brent values fell by about $10/bbl, or 20%, to below $55/bbl.
Before Covid-19 came along, the market was already nervous in anticipation of a supply overhang of 1 mb/d in the first half of 2020 due to continued expansion in the US, Brazil, Canada, and Norway.
The effect of the Covid-19 crisis on the wider economy means that it will be difficult for consumers to feel the benefit of lower oil prices.
9.32am GMT
NEWSFLASH: Global oil demand will fall this quarter for the first time in a decade due to the coronavirus, according to the International Energy Agency (IEA).
The novel coronavirus (Covid-19) is a major global public health emergency that has brought tragedy to many lives. Its impact is still unfolding globally. There is already a major slowdown in oil consumption and the wider economy in China. While the SARS epidemic of 2003 is widely used as a reference point for analysis of Covid-19, China has changed enormously since then. Today, it is central to global supply chains and there has been an enormous increase in travel to and from the country, thus heightening the risk of the virus spreading. In 2003, China's oil demand was 5.7 mb/d and by 2019 it had more than doubled to 13.7 mb/d (14% of the global total). Moreover, last year China accounted for more than three-quarters of global oil demand growth.
The consequences of Covid-19 for global oil demand will be significant. Demand is now expected to contract by 435 kb/d in 1Q20, the first quarterly decrease in more than a decade. For 2020 as a whole, we have reduced our global growth forecast by 365 kb/d to 825 kb/d, the lowest since 2011. Growth in 2019 has been trimmed by 80 kb/d to 885 kb/d on lower-than-expected consumption in the OECD.
9.25am GMT
Barclays has posted better-than-expected revenues and profits today, but this has been totally overshadowed by fresh questions over CEO Jes Staley.
Staley, the bank revealed this morning, is by investigated by UK financial watchdogs over whether he was sufficiently transparent about his links to the disgraced financier Jeffrey Epstein.
The American banking boss, who joined Barclays in 2015, says he developed a relationship with Epstein in 2000 when he was running the private bank at JP Morgan. Epstein died in prison last year while awaiting trial on charges of sex-trafficking underage girls.
Staley told journalists that the relationship started to "taper off" as he left JP Morgan in 2013 and that contact became "much less frequent" before it ended at the end of 2015. He claims the final visit took place around "middle to late 2015," when Staley took his yacht, the Bequia, to visit Epstein's private Caribbean island.
Related: Barclays boss Jes Staley's links to Jeffrey Epstein investigated
9.05am GMT
Renewed worries about the coronavirus are hitting European markets this morning.
The Stoxx 600 index of EU-listed companies has lost 0.5%, dropping back from Wednesday's record high.
8.44am GMT
French spirits group Pernod Ricard has cut its profit forecasts, due to the coronavirus outbreak.
8.34am GMT
Neil Wilson of Markets.com also blames yesterday's grim eurozone industrial output figures, and the coronavirus crisis, for causing the euro's latest weakness.
The euro is weaker for several reasons but the deterioration in industrial production numbers yesterday was important. Output declined by 2.1% in the final month of the year. For the whole of 2019, industrial production was down 4.1%.
The disruption to supply chains from the coronavirus could hardly come at a worse time. The ECB's big bazooka last September - Mario Draghi's parting shot - looks more like a pea shooter. But that won't stop the ECB from trying to do more. It's time realise this approach to monetary policy is dead - the EZ and Germany in particular must come around to fiscal stimulus.
8.25am GMT
The euro was already on a weakening path, before coronavirus worries shunted it back below $1.10 this month.
"European car manufacturers in particular are already warning of potential shortages of components due to factory shutdowns in China.
"So even if the virus is soon brought under control, eurozone industry is likely to remain in recession in at least the early part of this year."
8.17am GMT
The euro has fallen for seven out of the last eight days as "concerns over the European economy linger", says Jim Reid of Deutsche Bank.
7.59am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The euro is under pressure. Fears of a eurozone recession this year have driven the single currency down to its lowest level since May 2017.
Ouch! #Euro breached key support at 1.0879, falling to lowest since May 2017, amid momentum selling, stop-loss activity & after horrible econ data. Euro-Area industrial output slumped most in 4yrs. Production dropped 2.1% in December, more than forecast. pic.twitter.com/CmkpyWZL4g
"The main impact of coronavirus for Europe is growth.
"The euro area started the year with low growth and an ECB largely out of policy options. The hope was that . . . fiscal expansion would begin.
Related: Coronavirus latest updates: Hubei's leader sacked as China death toll passes 1,300 - live news
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