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What to Watch: Virus hits travel stocks, Amigo and Petro Diamonds slide

Tom Belger
Finance and policy reporter
Flight crew members wear masks at Pearson airport arrivals, shortly after Toronto Public Health received notification of Canada's first presumptive confirmed case of coronavirus, in Toronto, Ontario, Canada. Photo: Carlos Osorio/Reuters

Here are the top business, market and economic stories you should be watching today in the UK, Europe, and abroad:

Travel, luxury goods and commodities slide on virus fears

Stock markets sold off sharply and oil prices dropped on Monday, as fears mounted over the spread of the deadly coronavirus.

Some of the steepest share price falls came in travel, despite falling oil prices potentially lowering fuel costs if sustained. EasyJet (EZJ.L) shares dropped 4.5% and British Airways-owner IAG (IAG.L) lost 4.2% in early trading in London.

With China the world’s biggest luxury market, shares in luxury goods makers also suffered steep drops. Burberry (BRBY.L) declined by 4.7% in London, while in Paris Louis Vuitton-owner LVMH (MC.PA) shed 2.9%, and Gucci-owner Kering (KER.PA) declined 2.8%.

Commodity stocks were also hit, given China’s huge appetite for raw materials. Steel maker Evraz (EVZ.L) fell 5%, miner Anglo American (AAL.L) dropped 4.4%, and commodity broker Glencore (GLEN.L) lost 3.7%. Oil prices slid, with crude (CL=F) down 2.1% to $53.06 (£40.5) and Brent (BZ=F) down 1.9% to $59.50.

Major European stock markets opened over 1% lower across the board, suffering some of the steepest falls seen so far this year.

The FTSE 100 (^FTSE) was down 1.4%, the FTSE 250 (^FTMC) fell 1.2%, Germany’s DAX (^GDAXI) fell 1.4%, France’s CAC 40 (^FCHI) dropped 1.7%, and the Euronext 100 (^N100) lost 1.4%.

The slump followed a similarly sharp decline in Asia overnight. The Shanghai Composite (000001.SS) collapsed 2.7%, the Hong Kong Hang Seng (^HSI) lost 1.1%, and Japan’s Nikkei (^N225) shed 2%.

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Shares in lender Amigo crash more than 20%

Shares in lender Amigo were down 25% at around 10.15am in London, making it the biggest faller on the London Stock Exchange on Monday. Photo: Stefan Wermuth/Reuters

Shares in lender Amigo (AMGO.L) plummeted on Monday as it announced a review that could lead to the sale of the company.

The company has seen its value decline over the past year as it has faced increased scrutiny from the Financial Conduct Authority (FCA) over concerns about consumer understanding and high interest rates.

The company allows people with low credit scores to borrow by using guarantors. Its shares were down 25% at around 10.15am in London, making it the biggest faller on the London Stock Exchange on Monday.

It said the review could lead to a “reorganisation of entities within the group, the sale of the UK business or the sale of certain books of business.”

But the company said its loan book growth and impairments had been in line with expectations for the past nine months.

Petra Diamonds shares slide

Shares in Petra Diamonds (PDL.L) slid 9.8% on Monday after the company reported its first-half revenues had dropped by 6%.

The company blamed lower prices and weak demand from China, with trade tensions with the US and the protests in Hong Kong highlighted.

Petra said it saw increased price stability towards the end of the period and that demand has “continued to improve” in the current period, according to PA.

UK retailers have ‘slashed 10,000 jobs this year’

UK retailers have slashed almost 10,000 jobs already this year, according to new research.

Analysis by the Centre for Retail Research (CRR) suggests retail firms have cut 9,949 jobs over the past few weeks.

Two leading supermarkets have announced cuts in the past week alone. Sainsbury’s (SBRY.L) has said “hundreds” of office roles will be axed as teams are merged with Argos, which it bought in 2016.

Morrisons then confirmed a far bigger cull of 3,000 management jobs last Thursday, with roles running departments such as alcohol cut back.

The CRR highlighted recent job losses and closures at department store Debenhams, maternity retailer Mothercare, and supermarket Asda.

The department store Beales also collapsed into administration last week, putting at least 1,200 more jobs at risk.

US warns UK over ‘momentous’ Huawei decision

The United States Secretary of State has publicly warned the UK not to allow Chinese telecoms company Huawei to work on its 5G infrastructure.

Mike Pompeo said in a tweet on Sunday night the UK faced a “momentous” decision that risked its sovereignty.

Pompeo quoted a tweet from Conservative MP Tom Tugendhat, who warned that Britain would face a “real cost” to its “sovereignty” if Huawei was allowed to work on 5G. Tugendhat, who is seeking re-election as the chair of the Foreign Affairs Select Committee, said in a separate tweet the UK would “hand control to Beijing” if Huawei was cleared.

What to expect in the US

US stocks also looked set for sharp losses on coronavirus fears. Dow Jones futures (YM=F) were down 1.4%, S&P 500 futures (ES=F) down 1.5%, and Nasdaq futures (NQ=F) 1.9% lower in early trading in London on Monday.

"The coronavirus is an economic and financial shock,” said chief market strategist at Bannockburn Securities Marc Chandler, Reuters reports. “The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets.”

The S&P 500 had seen its biggest one-day drop in percentage terms in more than three months on Friday. Demand also rose for the ‘safe havens’ of gold and Treasury notes, knocking down yields.