23rd Jan 2020 16:53
(Alliance News) - Stocks in London ended lower on Thursday over fears that the coronavirus will damage growth in China.
China locked down some 20 million people at the epicentre of a deadly virus outbreak on Thursday, banning planes and trains from leaving in an unprecedented move aimed at containing the disease which has already spread to other countries.
The respiratory virus has claimed 17 lives since emerging from a seafood and animal market in the central city of Wuhan, infected hundreds of other people and been detected as far away as the US.
As efforts to contain the virus spread across China, Beijing cancelled massive gatherings that usually attract throngs at temples during the New Year holiday, while the historic Forbidden City will close from Saturday.
The internationally-exposed FTSE 100 index closed down 64.25 points, or 0.9%, at 7507.67.
The domestically-focused FTSE 250 ended down 222.42 points, or 1.0%, at 21,540.56, and the AIM All-Share closed down 4.83 points, or 0.5%, at 963.33.
The Cboe UK 100 ended down 0.8% at 12,716.87, the Cboe UK 250 closed down 1.0% at 19,434.48. The Cboe Small Companies ended up 0.1% at 12,462.89.
In Paris the CAC 40 ended down 0.7%, while the DAX 30 in Frankfurt ended down 0.9%.
In the FTSE 100, China-exposed mining stocks ended lower as investors fretted over the coronavirus outbreak.
Antofagasta closed down 4.8%, Rio Tinto down 3.9%, Glencore down 3.0% and BHP down 2.7%.
In addition, travel and leisure stocks ended in the red with British Airways parent International Consolidated Airlines, easyJet, InterContinental Hotels Group and Carnival down 3.9%, 3.5%, 3.2% and 3.6%, respectively.
IG Group said: "China remains the key concern for global markets today, with the decision to shut travel into and out of the entire Hubei province providing a warning signal for global travel firms. Losses for the likes of easyJet, IAG, Carnival, and Intercontinental Hotel all highlight fears that this could escalate into a global epidemic which limits travel in affected regions.
"We are also seeing a wider decline for stocks related to the Chinese growth story, with miners such as Antofagasta, Rio Tinto, and Anglo American all weakening at the prospect of weaker growth and productivity in China. With cities shutting down, the longevity of this outbreak will be crucial as a determinant of how economically detrimental this will be."
In the FTSE 250, Renishaw ended the best performer, up 6.0% after Morgan Stanley raised the engineer to Overweight from Equal Weight.
The pound was quoted at USD1.3107 at the London equities close, down from USD1.3137 at the close Wednesday.
The euro stood at USD1.1036 at the European equities close, down from USD1.1073 late Wednesday, after the European Central Bank kept interest rates unchanged.
The Frankfurt-based bank, as expected, kept its interest rates on main refinancing operations, the marginal lending facility and the deposit facility all unchanged at 0.00%, 0.25% and minus 0.50% respectively.
In addition, the ECB unveiled a new strategic review, the first since 2003, which will examine a number of key issues ranging from the inflation target to tackling climate change.
ECB President Christine Lagarde said there would be a broad scrutiny of central bank's objectives and policy tools and anticipated a conclusion of the findings by December.
"For now, we are sticking to our non-consensus view that the ECB will loosen policy further before the end of the year because we think the economy will perform much less well than the Bank is forecasting. But today's press conference has underlined the risk that the ECB becomes a 'lame duck' for the period of the strategy review, during which policy is left on hold even if we are right in anticipating that economic growth and inflation are much lower than most expect," said analysts at Capital Economics.
Against the yen, the dollar was trading at JPY109.39, lower than JPY109.90 late Wednesday.
Stocks in New York were lower at the London equities close amid fears of the coronavirus, as earnings season continues.
The DJIA was down 0.5%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.2%.
On the US corporate front, Procter & Gamble upped its annual guidance following a rise in earnings and revenue for the second quarter of its financial 2020 on higher volumes and pricing.
For the three months to the end of December, pretax profit rose by 16% to USD4.53 billion from USD3.92 billion the same period the year before. This was on net sales that grew by 5% to USD18.24 billion from USD17.44 billion.
Looking ahead, the consumer goods firm lifted its reported and organic sales growth forecasts to between 4% and 5% from the 3% to 4% range given in the first quarter. In addition, core earnings per share is set to rise by between 8% and 11% from the 5% to 10% range previously given.
The stock was down 1.0% in New York.
Comcast Corp regarded 2019 as "another great year", as earnings and revenue rose for the fourth quarter and the whole year.
The cable company, which in addition to its US operations owns UK pay-TV service Sky, said that in the three months to the end of December, net income increased by 26% to USD3.16 billion from USD2.51 billion the same period the year before, on revenue that rose by 2.0% to USD28.40 billion from USD27.85 billion.
NBC Universal however reported a 5.0% decrease in revenue to USD34.00 billion, reflecting lower content licensing, declines in advertising spend, and weaker performances from Filmed Entertainment and Broadcasting Television.
The stock was down 2.9% on Wall Street.
Brent oil was quoted at USD61.40 a barrel at the London equities close, sharply lower than USD63.14 at the close Wednesday, amid falling demand concerns stemming from growing travel bans in China.
"Given the importance of China for oil demand and having the outbreak falling on the cusp of peak domestic travel season [Chinese new year], the timing is particularly damaging," AxiTrader's Stephen Innes said.
Gold was quoted at USD1,563.00 an ounce at the London equities close, firm against USD1,557.45 late Wednesday.
The UK corporate on Friday has annual results from budget hotel chain easyHotel.
The economic events calendar on Friday has PMI readings from France, Germany, the eurozone, UK and US at 0815 GMT, 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively. Financial markets in China will be closed on Friday to mark Chinese new year's eve.
In addition, the World Economic Forum in Davos, Switzerland concludes on Friday.
By Arvind Bhunjun; [email protected]
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