The Weekly Note: 17 March 2020

17 March 2020

The Weekly Note: 17 March 2020

The Weekly Note is brought to you by the ALPHA: r² discretionary service team.

Market news

Global equities have continued to tumble rapidly in tandem with the unrelenting spread of COVID-19, the coronavirus that has already brought numerous countries to a standstill. The likes of Spain and France have followed Italy, and China before it, in placing the sort of restrictions on their citizens not seen since wartime. Britain is following suit, with Boris Johnson warning last night that regular life could be disrupted for up to a year. 

Wall Street tripped its `circuit breaker' for the third time in six trading sessions yesterday, after plummeting at the open in spite of emergency action from the Federal Reserve on Sunday night. Cutting interest rates to near zero was not enough to allay fears about a global recession. The Dow Jones plunged 12.9% yesterday, with other headline US indices close behind. The FTSE 100 is now at its lowest level in nine years, having fallen more than 30% since February 19, less than a month ago. 

European markets are somewhat quieter today, but the Euro Stoxx 50 volatility index -- the fear index for eurozone stocks -- has surged to a record level, above the peak of the financial crisis. European countries are planning to ban entry in to the Schengen zone, while President Macron has told France that “we are at war”. Macron also pledged an extra €300bn to support companies affected by measures of social distancing. 

Elsewhere, the Bank of Japan has pledged to ramp up purchases of exchange-traded funds and other risky assets in a bid to soothe markets. Rishi Sunak, the UK's new chancellor, is reportedly working on a bailout for businesses hit by coronavirus, after advising people to stay away from pubs, clubs, theatres and other gatherings. 

Data released at the beginning of the week painted a clear picture of the economic impact that is to come in the near future. In China, factory production plunged at the sharpest pace in 30 years at the start of the year. Industrial output fell by a much larger than expected 13.5% in January and February, compared to the same time a year earlier. 

Stock focus

Airlines are perhaps most obviously at risk during the global outbreak and all of the consequential restrictions on populations' movement. British Airways, for example, is grounding 75% of its fleet over the next two months. Shares in its owner, IAG, fell 27% yesterday alone. The Centre for Aviation has said that “most of the airlines in the world will be bankrupt” by May 2020. 

Associated British Foods has had to temporarily close a fifth of its stores due to the pandemic, putting its revenues directly at risk. Shops in France, Spain, Italy and Austria are shut as the governments banned non-essential shopping. 

Compass Group has warned that the coronavirus could erode first-half profits by as much as £225m. The world's largest catering group warned that the associated restrictions of the virus could lead to revenue growth being flat for the first time in over a decade. 

Amid the widespread threat to businesses and jobs everywhere, news emerged this morning that Amazon is hiring an extra 100k workers in the US to handle the spike in online orders. It warned customers at the weekend to expect delays and potential shortages, but has acted fast to maximise output. Next month, Amazon is due to increase hourly wages by $2/£2/€2 for US/UK/EU warehouse and delivery staff. 

Cineworld's shares have been down as much as 27% today amid fears that its £1.4bn merger with Cineplex might collapse, with customers being dissuaded, or in an increasing number of countries banned, from heading to the cinema. Both cinemas have closed sites in North America. 

Dixons Carphone announced this morning that it will close the group's 531 standalone Carphone Warehouse stores. It did not cite COVID-19 as a factor, rather explaining that customers have changed the way they buy technology. It hopes to deploy 1,800 staff into the larger Curry PC stores. The market has taken the news well this morning.


Subscribe to the Weekly Note!

Subscribe today and email [email protected] to register your interest, and receive the full Weekly Note in your inbox every Tuesday.


Walker Crips
Old Change House
128 Queen Victoria Street
London EC4V 4BJ

020 3100 8000
[email protected]


Important information

This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.

Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117.

The Weekly Note: 17 March 2020

Important note

No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.

Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, may fall as well as rise and the amount realised may be less than the original sum invested.

Walker Crips Group plc (Old Change House, 128 Queen Victoria Street, London EC4V 4BJ), registered in England, registered number 1432059, incorporates the following companies which are authorised and regulated by the Financial Conduct Authority: Walker Crips Investment Management Limited registered in England number 4774117 member of the London Stock Exchange, Walker Crips Wealth Management Limited registered in England number 3790291, Ebor Trustees Limited registered in England number 3514268, Barker Poland Asset Management LLP registered in England and Wales number OC341149.