foreign countries step of evacuations and travel restrictions apple temporarily closes all of its stores in the country. the british prime minister boris johnson prepares to lay out his vision for a trade deal with europe. he is set to warn the uk won't be following eu rules as foreign secretary dominic raab says they hope for a canada style deal. >> standards are higher but we assure our eu friends and partners, we will not be insisting that they align with our rules as applies to the free trade deal with the uk that's not the way free trade deals are done globally. shares in julius baer fall sharply as they suffer 37% drop in net year profits. we'll talk to the ceo at 11:30 cet as they promise to ramp up cost cuts. good morning welcome to "street signs." let's take you to chinese stock markets which plummeted amid the outbreak of the coronavirus which has infected more than 17,000 people. the shanghai composite closed at a one-year low after its worse session since 2015 over $400 billion in market value has been wiped off the mainland's indices in the first day of trade they have blamed a panic triggered by, quote, herd mentality and said the epidemic would not change the economy's long-term fundamentals let's get out to matt, who joins us from singapore. matt, i've got to say, what an opening session for chinese markets overnight. down more than 7% to 8%. talk to us about the response that we're seeing out of the pboc and the chinese authorities trying to dispel some panic that's in the air. >> yeah. i'll just recap the price actions for you. as you mentioned, it was a particularly rough session the markets opening down by about 8% didn't recover at all. the china markets have been shut since the end of january, the 23rd of january for the lunar new year break it was the worst single day break for the shanghai composite since august 2015. barely moving to end by down 7.7% as you mentioned, 420 billion wiped off the market value the pboc injecting $1.3 billion into the market to cut 17 and 14-day reverse repo rates, which was a surprise the chinese central bank saying the impact from the virus will only have a temporary impact on the economy and the stock market plunge driven by some irrational factors, is what they're calling it, or even panicked triggered by the herd effect this was the closing picture shenzhen down by more than 8%. the hong kong market moving higher up by 0.2 of 1% the likes of japan down more than 1%. australia, down by 1.3%. singapore off by 1.2%. the kospi recovered some declines and closed flat it's all about china and the eye-watering moves we saw in markets, down by 7.75% at the close of trade back over to you. >> absolutely, matt. we're seeing knock-on effects in some of the european sectors that have exposure to china as well let me talk you through what we're seeing in europe starting with some of the miners and a lot of those are actually based in the uk and ftse 100 a bit of a mixed bag we see glencore down 1%. luxury names very much in focus. lvmh down 0.4% no surprise there that the luxury stocks are also getting hit on back of the moves, both in china and hang congreong kong today we're seeing a spot of green in the travel companies, lufthansa up worth bearing in mind, even though travel has been hit, oil prices are significantly lower that is a key component. so, let me talk you through what is going on in oil because oil-producing nations will hold an emergency meeting to discuss the impact of the coronavirus on oil prices the opec and non-opec joint technical committee will reportedly meet this week in vienna to decide whether to cut current output cuts beyond march or put deeper restrictions in place. this is the picture for brent and wti this morning you can see brent is down at $56. some heavy, heavy losses overnight. for the month of january, energy was the worst performing sector amongst all sectors in u.s. and europe looking at losses of about 15%. it's been a very heavy month for energy you can see that this morning as well no different. gold is coming off a bit to tie it back to what i was saying about the travelle and airline companies, the lower price is a margin from cost perspective, even though travel has been hit by the coronavirus outbreak ow, the death toll from th virus outbreak has risen to 362 with the philippines reporting the first fatality outside of china. over 17,000 cases of the infectious disease have been confirmed globally and the u.s. administration has temporarily denied entry to foreign nationals who have recently traveled to china u.s. carriers, delta air lines, american airlines and united airlines have also suspended their services to china. industrial profits in china also fell for the first time in four years in 2019 as the manufacturing sector felt the brunt of the impact of the trade war with the u.s data showed profit declined 3.3% annually to $898 billion for 2019 meanwhile, factory activity grew at its slowest rate in five months during january, according to the private survey. the data does not take into account the full effects from the coronavirus outbreak already seeing weakness in the data and that's not even accounting for the virus let's bring in amanda carr, strategist let me take you to market reaction we've had in the last hour steep decline as spelled out by matt in singapore. chinese he can we markets down 8% and the pboc and authorities are coming in and saying, no reason to panic long term this shouldn't derail the trajectory of china. do you share that view, the optimism that once this virus is contained china can come back as strong as it was before? >> well, that's a question of how long it lasts for. at the moment, if they're talking about peaking in february, basically we're talking about q1, a massive hit in terms of both consumption and the manufacturing side of the economy. because normally you'd expect, obviously, you know, the strength to your consumer brents after spring festival you get revamp in manufacturing and keys of how many orders are coming in it was meant to be better because of the easing of the trade war. obviously, this -- the shutdown has been extended. this means manufacturing pickup. the construction pick up isn't going to happen in q1 so does it come down into q2 and do things start stabilizing? the pboc and the ndrc you're trying to stabilize expectations in terms of how long the virus lasts for -- >> it's unknown and nobody knows that and it's coming at a bad time for the chinese economy one question for you is a question about the actual arsenal in the tool kit the chinese authorities have here. you could also argue they spent a lot of their chips dealing with the trade war last year, all of the chip cuts, the injection of liquidity? are theyrunning out of options now that this black swan event occurred. >> fortunately, they did not go full-on stimulus some of the infrastructure was only up 4% last year they didn't go, you know, full like in 2008 last year in order to counter the trade war effect. the economy was picking up the -- there was more infrastructure coming in there was month export orders coming in. we could have seen a little rebound as we came into the rest of the year and things were relatively stable. obviously now they have to move into much more sort of supportive measures. the risk is in terms of the private manufacturing side because they're the ones that have been hit bit trade war. they don't benefit so much from the stimulus package if they're also getting the shotdowns extended, cash flow is tight, maybe some support isn't going to come through to that level, then they're going to be the ones most at risk. it will be the private led industrial side of the economy, which will be hit the most and the rest can be supported in some way. >> you make an interesting point. i'm interested to hear your view on a company liabilities here because we have started to see yuan's appreciation. many of these companies do have foreign-denominated debt and the dollar the dollar depreciates that poses a headwind is that a knock-on effect we should worry about in china, the depreciation of the yuan could lead to further number of defaults and deliktcys? >> the flash point is property sector because they have the highest proportion of u.s. dominated debt they tend to be most highly geared, in general if their sales and their construction activities don't start recovering and cash flows as we get into q2, the property market becomes one of the biggest risks. >> it was down 10% in sars, wasn't it? >> yes so, if people aren't buying the houses and the construction isn't starting again, then that's going -- this is when, if the virus continues, that will be the biggest risk point. >> another sector we watched closely in china is the auto sector obviously, the chinese auto demand is something that has ramifications for the entire auto sector in the world we saw car sales drop 8% it was a weak year that was already down from the 2% from 2018 what does the coronavirus do in china, does it mean they'll stop now and later compensate in the year >> on the consumption side you can see that's probably likely to rebound more quickly, sort of afterwards because you don't have the drag on investment, you don't have the cash flow issues. if people aren't spending now, then once the virus passes, they can spend then as long as the money comes in what of the -- with the auto market, a big factor last year and in previous year was the deleveraging, the consumer financing under pressure that's beginning to make a reappearance some new companies setting up and some loosening actually, the auto sector is potentially the one that could stabilize first. other sectors like private manufacturing and property market that may seat biggest hits. >> interesting points, miranda thank you for joining me on "street signs. miranda carr from haitong international. talking through implications on chinese sectors to watch out for. now, a second plane carrying british nationals from wuhan has arrived in the uk. passengers on the flight have been quarantined at a hospital along with more than 100 others who flew into britain late last week julianna is live from london is monitoring how the uk government has been responding so far just give us a breakdown of some of the measures that have been introduced as of yet to contain the spread of coronavirus in the uk >> reporter: good morning. firstly, let's take a look at what the uk government has done in response to the two confirmed cases of coronavirus here in the uk at the end of last week, two people were tested positive for the coronavirus. that's 2 out of 266 people who were tested. these were two chinese nationals. one of whom who was a student at the university of york the uk government has taken these two people who tested positive to one of the high consequence infectious disease units in new castle. there are two units in england one is behind me, the royal free hospital, and the other is in newcastle. they're being treat there. there's the issue of those in wuhan to the united kingdom. the first round people were repat rated, 83 uk nationals returned to the uk and over the weekend a number more were returned to the uk on a french flight interesting cooperation among european nations to get those european out of wuhan. but more broadly, the uk has not taken as drastic a stance as other nations like the u.s., australia, new zealand they haven't completely closed the borders to chinese nationals. they've gone with the w.h.o. recommendation to introduce more advanced screening measures at airports for those coming from china. the uk not as drastic as the u.s. and some of the other nations have been, but they are taking measures to control the situation. and every day at 2:00 p.m., we can expect to see an update from the uk's department of health and social care. we'll look forward to that update later this afternoon. >> excellent thank you for explaining it. we're all on high alert to see how the situation evolves. not just in the uk but everywhere. if you want to get involved in any of the discussion we had, whether it's talking about the movements we've had in chinese markets or the implications it could have on the global economy, tweet us. we are @streetsigncnbc or treat me directly @cnbcju. still to come, we find out how julius bair plans to trim costs. we'll cross live to jeff in zurich also make sure to tune into our interview with the new ceo philipp rickenbacher welcome back to "street signs. let me take you to some market price action we've had overnight because we had heavy, heavy declines in chinese he can we indees we were talking about earlier with the shanghai composite down 7% to 8% during the session. very strong session of declines as far as asian markets are concerned. other markets in asia did pare some losses toward the end of the session. the handover by the time we got to europe was ream you are seeing a bit of green on the board in the heat map in europe, bucking the trend from what we saw towards the end of last year. the stoxx 600 is up a quarter of a percentage point after a day of very heavy losses on friday for both european indices and wall street as well. so, a bit of green here. and, of course, the major concerns that of the ramifications of coronavirus, what it means for global growth, industrial production. remember, we also had those industrial production numbers come out of china overnight as well, pointing to a disappointing number those haven't even accounted for the coronavirus impact still a lot of questions, a lot of uncertainty for the time being we're seeing a bit of a relief trade in europe stoxx 600 let's talk about individual markets and break it down further. ftse 100 in the uk up 33 points. in is the first day of trading for the ftse 100 since the uk has officially left the eu obviously, the next question now is the free trade agreements and whether or not we can get to free trade agreements in the next 11 months we'll have 11 months to talk about that the picture for the ftse 100 is up 0.5%. dax up 0.4%. cac up a similar amount and the italian index up 0.4 of a percentage point as well the names underperforming, the sectors underperforming with exposure to china. miners, a lot are situn the uk, glencore, so that basket is about half a percentage point. oil and gas down a percentage point, no surprise given they have plunged brent at the lowest level in a year we have an emergency meeting coming up with opec to decide what to do on output cuts. auto down 0.1% tech sector up about 1%, so bucking the trend there. i want to take you to some bank and finance news julius baer shares are down after the company announced fresh midterm targets and cost cuts after seeing net profit t shareholders drop 37% in 2019. the swiss lender and wealth manager says it plans to lower its cost/income ratio as part of a three-year strategy to recoup. jeff is in zurich. the reaction in julius baer shares down more than 4% tells you investors are not really buying into this strategy. also, worth bearing in mind that the profit was down almost 40% last year. yet again, the same issue is arising, that of profitability what can these asset managers do at this point to help boost profitability at a time of increased amount of competition in the space >> reporter: well, the problem is, as you know, you've been following the sector, most of these banks, as they're announcing ho-hum numbers are offering more jam tomorrow and i think this is the message that we're getting from julius baer obviously, there was a big impairment number in the earnings we saw for full year 2019 so, that explains some of that big headline net profit drop attributable to shareholders, that 40% you talked about, or 37% in reality but the bank is announcing some interesting new targets here one is 10% profit growth over the cycle per annum. they think they can do that by squeezing costs and focusing on efficiencies within the business they also want to use technology as a way of trying to offer new higher value product to existing clients. but i think what's interesting in the outlining of the new targets over the next three years is that they've set to one side that ambitious net new money number that traditionally we see these wealth managers go after as they signal to the market higher growth ambitions what julius baer is saying today is, look, we don't think that going for higher net new money to achieve higher growth is actually the right strategy in an environment where there's so much competition and gross margin is likely to contract further if we don't take the skap scalpel to some of the cost side of the business so, i think the market, as you say, may not be buying into the broader strategy, although perhaps just a tough market day. but i think the overall message, which we've seen from all of the banks, that the broader environment is so competitive and challenged by these negative interest rates that it's better to focus on quality where you can find it. and i think that's the message that julius baer is trying get over i do have an interview coming up with philipp rickenbacher, the relatively new ceo i've just been in the presentation listening to the ambition it will be interesting to see what he has to say to us in a one-on-one conversation. because, of course, there are some out there who will say by not pursuing growth at all costs they are rather running up the white flag right now >> i'm interested in what they have to say about the net new money target, jeff, because it echoes a question i put to the ceo of ubs not so long ago, a couple weeks back. said, we're a new aradigm. it seems the focus is on making the most of what they have and increasing margins, increasing profitability rather than going out there and exploring and trying to get that new business in what has become a very, very competitive domain i just want to take you to another point, jeff, that is on the cost-cutting front they have also pledged to keep their cost/income ratio low. they want to get it down to 61% from 70% have they given you any more color on how they'll get there and where those cost cuts are going to come from >> well, they talked a bit about taking out another 300 positions. the question remains whether that is in the lower tooers of management or whether that comes after actu-- from the sharpened, some of the managers within the press conference, philipp rickenbacher was actually asked that question by one of the analysts about what that means for relationship managers and would that be an area where they would cease aggressive recruitment that's one space where costs have been driven up for the organization his message, no. we are still looking for the right people but you do get a sense that maybe compensation structures and amounts are going to have to change. but that's, perhaps, a reflection of what's going on across the broader industry. as you know, all of the banks are going down this road i think the real issue at the end of the day will be execution and that will determine, i think, whether the shareholders are going to stay on board with some of these strategies it's all down to mr mr. rickenbacher to prove he is the right person for the job given that he is still relatively unknown by the markets. as i say, it will be interesting to see what he has to say when we have that conversation in a little while's time and work out whether this is the management team that can execute on this strategy and improve the overall return to shareholders whilst cutting the costs. back to you. >> really looking forward to that, jeff we'll be back out live in an hour's time. i just want to bring you some flashes we're getting out of hong kong. leader carrie lam here saying they announced the suspension of ten border crossings out of 13 with mainland