The FTSE is higher this morning, propped up by a strong rally in medical device maker Smith & Nephew but the news flowis gradually eroding any investor optimism.
First the good news: Smith & Nephew jumped 8% after it reported sales that for the first time surpassed $5 bn. Lloyds Bank also rallied close to 4% despite reporting a 26% drop in annual profits as the decline was within the range that analysts had predicted.
But on a heavier note, the coronavirus provided much more to worry about. The outbreak has now spread into South Korea with the city of Daegu becoming Korea’s Wuhan. If the spread of the virus doesn’t reach its peak until April China’s growth could drop below 5% this year instead of the previously forecast 6%, which would then have repercussions on the growth of technology companies, phone makers, miners, oil producers, airlines and shippers.
This morning Air-France KLM and Maersk were the latest to join the chorus of firms warning about their revenue in the coming quarter because of COVID-19. China is trying to balance out some of the hit to the economy by cutting the lending rate, but it remains to be seen if the cuts are enough to stem the losses.
Brent crude stabilises
Brent crude prices are flat after an overnight rally but the commodity is now trading at its highest level since the outbreak of the virus in China. The ongoing disruption in Libyan supplies and concerns that US sanctions could stifle the outflow of Venezuelan crude into the market are helping Brent crude trade close to $59.20.