Week in Review: FTSE rocked by biggest one-day fall in 30 years in wake of Trump travel ban

FTSE NEWS

The FTSE 100 index of stocks suffered one of its worst ever days on Thursday losing 10.87% of its value as markets responded to the US travel ban on European countries. The 100-company index closed at 5,237.48, its lowest level since 2012. Similarly the FTSE 250 closed at 15,717.42, down 9.35%.

Monday (16th March) sees Andrew Bailey take over from Mark Carney as Governor of the Bank of England, while Saudi Aramco announces its full year results, which will prove notable in the context of the major market losses it suffered this week. The UK’s latest monthly unemployment figures are released on Tuesday (17th March). On Wednesday (18th March) Visa's UK Consumer Spending Index is published, which could provide valuable insights into the impact coronavirus crisis has had on spending in recent weeks. The most important event on Wednesday though is the US interest rate decision. All eyes will be on Jerome Powell, chair of the Federal Reserve, the American equivalent of the Bank of England, as he announces whether the US will follow its emergency rate cut with another. History shows that the Fed tends to follow the same pattern every time it issues an emergency cut. The UK Treasury publishes its Finance Bill 2019-20 on Thursday (19th March) following on from the Chancellor’s Budget. This is preceded earlier in the day by the Bank of Japan’s interest rate decision. Japan has not been as affected as other nations by the global pandemic, which could colour governor Kuroda’s views. Finally, on Friday (20th March) the FTSE UK Index quarterly review changes are applied. This will see Kingfisher (KGF), TUI (TUI) and NMC Health (NMC) demoted from the FTSE100.

SECTOR IN FOCUS

Travel stocks are being particularly badly affected by the coronavirus pandemic as people around the world curtail travel plans or government impose restrictions. Lufthansa (LHA) will be publishing its annual results on 19th March, which could make for uncomfortable reading. Airlines such as Norwegian (NAS) have witnessed significant drop-offs in business since the crisis began, cancelling flights and temporarily laying off staff. Likewise, low-cost operators such as EasyJet (EZJ) have cut flights from destinations particularly affected by the illness, such as Italy. Elsewhere, cruise operator Carnival (CCL) has cancelled its Princess cruise ship cruises for the next two months, leaving no less than 18 ships in limbo. Physical travel companies are not the only ones taking drastic measures either. Unlisted insurer LV= has announced it is stopping travel insurance cover for new customers as trips become uninsurable. Likewise Aviva (AV.) has set new restrictions on its policies as the cost of protecting consumers mounts.

ECONOMIC UPDATE

ICAEW Chartered Accountants is set to publish its annual economic forecast for the UK on 20th March. This will be one of the first independent bellwether forecasts in the wake of Chancellor Rishi Sunak’s combative Budget and will signal where the UK economy is likely headed as it faces coronavirus head on, with an enormous fiscal package of £30 billion to fight the illness, alongside longer-term infrastructure commitments that amount to a whopping £600 billion of spending.

FUND WATCH

In times of market turmoil, having some of your portfolio in bonds makes sense as these don’t typically follow the performance of equity markets. You can even select ethical funds such as Rathbone Ethical Bond R Acc (GB0030957137).

COMPANY ANNOUNCEMENTS

17th March – With the mass market advent of electric vehicles, some old-school car manufacturers have looked out of place. Volkswagen’s (VOW3) annual results will provide a snapshot of the industry, but now its own mass-market EV is near ready, analysts reckon it has better times ahead.

19th March – Next plc (NXT) latest results will likely bear the brunt of the coronavirus crisis, but as it reports its full year preliminary results, the high street retailer does so against a more positive backdrop than many of its peers. Investors will hope it can weather the current storm and continue its good performance in future.