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England's chief medical officer confirmed two cases of the virus (via Getty Images)

FTSE 100 stumbles as coronavirus spreads to the UK

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Britain’s FTSE 100 has fallen sharply after two people tested positive for coronavirus in the UK and the pound fell following the Bank of England’s decision to hold interest rates yesterday.

England’s chief medical officer said the two people were being treated at a specialist centre in Newcastle after falling ill in York.

Read more: Breaking: WHO declares public health emergency as coronavirus escalates

European stock markets also fell after data showed the Eurozone grew at its slowest rate in six years in 2019.

The FTSE was down 0.8 per cent by 11am. Germany’s Dax was 0.4 per cent lower, France’s CAC 40 was down 0.7 per cent, and the pan-European Euronext 100 had shed 0.6 per cent.

The coronavirus outbreak has now claimed 213 lives and infected 9,800 people globally. All deaths and the vast majority of infections have been in China, where it began.

Much of China is in lockdown as it battles the virus, leading investors to fear that it will damage the already relatively weak economy.

Yet survey data today showed that China’s manufacturing sector held up better than expected in January, leading to a more upbeat mood among investors.

Any cheer was quickly lost when the UK cases of coronavirus were reported, however, renewing fears that it could dampen global growth.

The FTSE 100 was also pushed down by a higher pound, driven by the Bank of England decision. Higher interest rates cause more demand for a currency.

“For sterling, gains were held on to overnight after the BoE’s highly divisive decision, which saw monetary policy committee members vote 7-2 in favour of a rate hold,” said Bethel Loh, macro strategist at trading platform Think Markets.

A higher pound lowers the value of the overseas earnings of FTSE 100 firms, weighing on the index.

Connor Campbell, financial analyst at trading platform Spreadex, said sterling may have been “expressing some relief that Britain can move onto the more important trade negotiations part of Brexit”.

Read more: Coronavirus: UK to evacuate 200 Brits from Wuhan at 9pm

The UK will officially leave the EU tonight at 11pm after three years of wrangling over the outcome of the Brexit referendum.

Investors are broadly grateful for some certainty but worry about the next phase of negotiations between the UK and the EU. The two sides have until the end of 2020 to strike a “deep free-trade agreement”, which many have doubted is possible.