Virus and Davos set the tone for the day

The FTSE plunged more than 1% after opening as China was hit with a SARS-like virus just days before the start of the Chinese New Year. Chinese and Hong Kong shares dropped 1.7% and 2.8%, respectively, on fears that the virus will spread quickly over the coming days when vast numbers of Chinese will travel for annual festivities. In London luxury brands and travel stocks came under most pressure, closely followed by mining shares as China is the world’s biggest buyer of metals.

One ray of light came from budget airline easyJet which bounced up 4.8% after it upped its guidance on first half revenue. The company reported passenger revenue numbers exceeding expectations.

The start of the World Economic Forum in Davos today could throw up some interesting headlines as President Trump is due to address the forum in the course of the morning. Climate change will no doubt be one of the top issues on the agenda as environmental campaigners are lining up protests throughout this week.

Unemployment data lifts sterling

The pound ticked back up above the $1.3 mark, helped by a slight improvement in UK employment in the three months to November. The numbers today together with the latest improvement in the housing market mean that although the Bank of England started shifting towards cutting rates at the end of this month it may end up holding back on this decision until later this year.

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