4th Feb 2020 16:50
(Alliance News) - China's attempts to alleviate the fallout from the spread of coronavirus as well as efforts to stop its spread allowed European stocks to rally on Tuesday, with the FTSE 100 adding more than 100 points.
Also helping London's blue-chip index were gains for Ferguson, BP and Glencore.
The FTSE 100 index closed up 113.51 points, or 1.6%, at 7,439.82. The FTSE 250 ended up 279.08 points, or 1.3%, at 21,439.93, and the AIM All-Share closed up 8.99 points, or 0.9%, at 960.37.
The Cboe UK 100 ended up 1.4% at 12,603.43, the Cboe UK 250 closed up 0.9% at 19,340.64, and the Cboe Small Companies ended 0.4% higher at 12,480.02.
In European equities on Tuesday, the CAC 40 in Paris ended up 1.8%, while the DAX 30 in Frankfurt also closed 1.8% higher.
"Sentiment was helped by the World Health Organisation stating that 'currently we are not in a pandemic'. Add onto that another injection of USD71.5 billion into the banking system by the People's Bank of China, and the country's continued attempts to halt the transmission of the coronavirus, and the Western indices were free to go on rebounding," said Connor Campbell at Spreadex.
The improved mood came despite the death toll in China increasing to 425 with the number of those infected by coronavirus rising above 20,000.
More Chinese cities, including one just 175 kilometres from Shanghai, were put under lockdown on Tuesday, as the deadly new virus spread further from its epicentre. Around 12 million people are affected by the new restrictions, adding to the tens of millions of people already quarantined in and around Wuhan, ground zero for 2019-nCoV.
The safe-haven Japanese yen was weaker on Tuesday amid the improved risk appetite. Against the yen, the dollar was trading at JPY109.43 compared to JPY108.63 late Monday.
Elsewhere in forex, the euro stood at USD1.1035 at the European equities close Tuesday, against USD1.1059 at the same time on Monday.
The pound was quoted at USD1.3026 at the London equities close Tuesday, firm compared to USD1.3008 at the close on Monday.
Some upbeat UK construction data was unable to significantly boost sterling, which continued to be weighed on by Brexit trade talk worries.
The IHS Markit/CIPS PMI rose to 48.4 in January from 44.4 in December. The latest reading remained below the neutral mark of 50.0, indicating contraction in the sector, but signalled the slowest fall in output for eight months.
FXStreet consensus had seen a reading of 46.6 for January.
In commodities, Brent oil was quoted at USD55.00 a barrel at the London equities close Tuesday from USD54.90 late Monday.
Gold was quoted at USD1,552.50 an ounce at the London equities close Tuesday against USD1,576.67 at the close on Monday.
Stocks in New York were in the green at the London equities close, with the Dow Jones up 1.5%, the S&P 500 index also 1.5% higher, and the Nasdaq Composite up 1.6%.
The Nasdaq was buoyant despite shares in constituent Alphabet slipping 3.3%.
The Google parent reported an increase in profit in the final three months of last year amid growth in digital advertising and cloud computing, but shares took a hit on disappointing revenue growth.
Profit rose 19% from a year ago in the quarter to nearly USD10.7 billion as revenue increased 17% to USD46 billion for the internet giant.
In London, Ferguson, Glencore and BP were helping to drive the FTSE 100.
Ferguson shares gained 7.3% after the company said it is mulling two options for listing in the US following the planned demerger of its US and UK businesses, and announced it has started a new USD500 million share buyback.
Ferguson said that its strong cash generation, as well as giving opportunities to invest in organic growth and acquisitions, means the group has surplus cash resources available.
In addition, the plumbing and heating company said it is considering two options for its listing structure going forward.
The first option is to seek shareholder approval for an additional listing of ordinary shares in the US. The second option is to seek shareholder approval for a primary listing in the US.
Glencore advanced 5.1% despite reporting a mixed performance in production for 2019, with higher output of zinc, cobalt and coal, but lower copper, gold, silver and nickel.
Own-sourced copper production was down 6% to 1.37 million tonnes, partially due to the scaling down and placement into temporary care and maintenance of Mutanda in the Democratic Republic of the Congo, as well as Mopani's extensive smelter refurbishment shutdown in Zambia.
Due to a ramp-up at the Katanga mine in the Congo, cobalt output rose by 10% to 46,300 tonnes. Own-sourced zinc production edged up 1% to 1.08 million tonnes, while nickel production was down 3% at 120,600 tonnes. Total coal production for the year was 8% higher.
BP shares rose 4.2% after full-year profit beat analyst expectations, despite declining on a year ago.
In the three months to December 31, underlying replacement cost profit was down 26% year-on-year to USD2.57 billion from USD3.48 billion. For the full-year, it declined 21% to USD9.99 billion from USD12.72 billion.
According to company compiled consensus from 20 analysts, 2019 RC profit was predicted to come in at USD9.50 billion and for the fourth quarter alone at USD2.10 billion.
"Fourth quarter profit was down sharply but this was to be expected given the recent pressure on oil prices. And, not for the first time in recent years, the company still outmatched expectations while also hiking the dividend," said Russ Mould, investment director at AJ Bell.
In the FTSE 250, Micro Focus sank 22% as its chair stepped down amid a downbeat outlook for the year ahead.
The enterprise software company said that Kevin Loosemore will be standing down as chair on February 14, after 15 years in the role. Greg Lock, former chair of Computacenter, has been appointed the company's new chair, effective from the same date.
For the 12 months ended October 31, 2019, the FTSE 250-listed company reported revenue of USD3.35 billion, down 29% from USD4.75 billion in the 18 months to October 31, 2018. Company-compiled consensus saw revenue at around USD3.37 billion.
Annual adjusted earnings before interest, tax, depreciation and amortisation amounted to USD1.36 billion for the 12 months. Consensus saw adjusted Ebitda to be around USD1.37 billion.
For the current financial year, Micro Focus predicts revenue to be 6% to 8% lower year-on-year on constant currency basis. The company also expects increased investments to hit adjusted Ebitda margins in financial 2020 and 2021.
Electrocomponents closed up 6.0% after the electrical products distributor reported a rise in revenue in the four months to the end of January, and also said Chief Executive Lindsley Ruth will be returning to the company following a temporary leave of absence.
In early November, Ruth was granted temporary leave whilst he received treatment for a medical condition. He will now take back the role from Chief Financial Officer David Egan, who had assumed his CEO duties, on Monday next week.
Turning to sales, Electrocomponents said that in the four months to January 31, group revenue was up 2%. Sales in Northern Europe and Southern Europe were both up 3%, but Central Europe saw a fall of 4%. Emerging markets sales rose 8% in the four-month period.
In the corporate calendar on Wednesday, there are full-year results from packaging firm Smurfit Kappa and interim results from housebuilders Barratt Developments and Redrow. There are third quarter results from telecommunications firm Vodafone, and a trading statement from pizza delivery company Domino's Pizza.
At midday are full-year results from pharmaceutical firm GlaxoSmithKline.
In the economic calendar on Wednesday are a raft of services PMIs, with one from Japan due at 0030 GMT, China at 0145 GMT, Germany at 0855 GMT, the eurozone at 0900 GMT and the UK at 0900 GMT. Eurozone retail sales are at 1000 GMT.
In the US on Wednesday, there is ADP employment change at 1315 GMT and an IHS Markit services PMI at 1445 GMT, followed by the ISM non-manufacturing PMI at 1500 GMT.
By Lucy Heming; [email protected]
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