Investors focus on spread of virus outside of China
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The coronavirus outbreak has gained pace outside of China, and stock markets in Europe are expected to react heavily. The World Health Organisation on Sunday reported 78,811 confirmed cases, but 367 new cases came outside China, a larger proportion than previously.
Italy has imposed strict travel conditions, including fines for people leaving certain areas in the north of the country. Health experts have suggested that the pace of the outbreak outside of China is concerning – although in China some restrictions have been eased.
European stock market futures prices indicate that heavy losses are expected at the opening bell as efforts to contain the virus spread. In London the FTSE 100 is likely to fall by 1.3%. The blue-chip Euro Stoxx 50 is pegged to fall by 1.8%, as are Germany’s Dax and France’s Cac 40.
That followed heavy falls during Asian trading hours. South Korea has suffered a spike in cases, with the knock-on effect of plunging stocks: the country’s Kospi index slumped by 3.9%. Losses were more contained in China, where the outbreak has already taken its toll.
Primark owner AB Foods indicated that its factories have been affected by the outbreak, with reduced capacity at its Ovaltine plant – baked goods and animal feed have also been affected. It does not expect Primark to be affected in the short term, but warned that could change if there is prolonged disruption.
We typically build inventories in advance of Chinese New Year and, as a consequence, are well stocked with cover for several months and do not expect any short-term impact
If delays to factory production are prolonged, the risk of supply shortages on some lines later this financial year increases. We are assessing mitigating strategies, including a step up in production from existing suppliers in other regions.
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