5th Mar 2020 12:06
(Alliance News) - Stock prices slumped as Thursday's trading session in London progressed, with the spread of coronavirus once again front-of-mind as the UK's chief medical officer warned the country has moved to a 'delay' response phase.
The FTSE 100 index was down 117.34 points, or 1.7%, at 6,698.25 on Thursday. The mid-cap FTSE 250 index was down 338.23 points, also 1.7%, at 19,404.60 and the AIM All-Share index down 0.8% at 878.70.
The Cboe UK 100 index was down 1.6% at 11,343.38. The Cboe 250 was down 1.7% at 17,321.14 and the Cboe Small Companies down 0.4% at 11,587.55.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were down 1.7% and 1.6%, respectively.
Stocks "initially got off to a bright start as investors were encouraged by the early global response to the coronavirus. As ever though, we're seeing a constant stream of coronavirus updates so perhaps it's taking its toll," said Craig Erlam at Oanda.
"Particularly the update from the UK chief medical officer who warned it's a case of delay rather than containment as they find a case of community transmission, which could rapidly increase the spread and make it harder to contain," said Erlam.
The delay phase means measures to tackle coronavirus are ramped up to delay its spread.
Chris Whitty, while being grilled by members of Parliament on the Health & Social Care Committee, said there was now evidence of community transmission between people who had no connections to overseas cases or returning travellers.
Earlier Scotland confirmed three more cases of coronavirus, taking the UK total to 90. Overall, figures show 80 cases in England, six in Scotland, one in Wales and three in Northern Ireland. Worldwide, the coronavirus outbreak has infected more than 95,000 people and killed over 3,200.
Stocks in the US, which had surged on Wednesday on the back of a USD8 billion spending plan agreed by Congress to tackle the fallout from the virus, were pointed towards a sharply lower open on Thursday.
The Dow Jones was seen down 1.6%, the S&P 500 down 1.8% and the Nasdaq also down 1.8%.
Awaited today are comments from Bank of England Governor Mark Carney and Bank of Canada Governor Stephen Poloz, who speak at 1700 GMT and 1745 GMT respectively.
On Wednesday the Bank of Canada cut rates by 50 basis points, while the BoE meets later this month. The Federal Reserve cut US rates by the same amount on Tuesday.
"Markets are speculating whether the BoE might reduce interest rates ahead of its next scheduled policy announcement in three weeks' time," commented Lloyds Bank.
Sterling was quoted at USD1.2913 on Thursday, higher than USD1.2812 at the London equities close on Wednesday.
The euro traded at USD1.1164, soft against USD1.1141 late Wednesday. Against the yen, the dollar was quoted at JPY106.95 versus JPY107.25.
Brent was trading at USD51.52 a barrel on Thursday, firm versus USD52.17 late Wednesday. Gold was quoted at USD1,646.81 an ounce, up from USD1,643.40.
In London, ex-dividend stocks were at the bottom of the FTSE 100. Russian steelmaker Evraz was down 12%, housebuilder Persimmon down 5.9% and lender Standard Chartered down 4.9%.
ITV was also among the blue-chip losers on Thursday, down 11% as it noted travel advertising deferments caused by the coronavirus outbreak.
For 2019, pretax profit fell 6.5% to GBP530 million from GBP567 million in 2018 as operating costs increased 6.1% to GBP2.77 billion from GBP2.61 billion. Total advertising revenue slipped by 1.5% but had been guided to fall 2%.
Looking ahead, ITV expects advertising revenue to be up 2% in the first quarter of 2020, though early indications suggest it will be down 10% in April. The broadcaster noted that it has seen travel advertising deferments relating to the coronavirus outbreak.
Among few risers was Melrose Industries, up 1.4% as it swung to a profit for 2019.
Melrose delivered a pretax profit of GBP106 million for 2019, swinging from a pretax loss of GBP542 million the year before. On an adjusted basis, pretax profit was 32% higher at GBP889 million.
Melrose has operations in the aerospace, automotive, and powder metallurgy industries through GKN, which it bought following a protracted GBP8.4 billion takeover in 2018. It also owns Nortek Air & Security, which makes things such as air conditioners and heat pumps.
Melrose said GKN is gaining momentum after its first full year of ownership. Aerospace revenue rose 7%, though automotive revenue was down 6% in line with a soft market.
Nortek had "another" strong year, Melrose continued, though the company has now appointed advisors to look into the future of the Nortek Air Management business.
In the FTSE 250, Capita sank 24% as it warned more spending is required than originally thought.
London-headquartered Capita's 2019 revenue declined by 6.1% to GBP3.68 billion, compared to a 7.3% yearly decline in 2018. Adjusted revenue, taking into account accounting changes, fell 4% to GBP3.65 billion.
Capita swung to a pretax loss of GBP62.6 million in 2019, it continued, following a GBP272.6 million pretax profit in 2018. Adjusted, pretax profit fell 2% to GBP275.0 million. The loss came after Capita booked a more than GBP300 million gain on a disposal in 2018.
"Transforming an organisation of Capita's size is a complex challenge; there remains more to do and it is requiring more investment than we had expected in 2018," said Chief Executive Jon Lewis.
Capita sees "modest organic growth" and sustainable free cash flow of GBP160 million in 2020, a figure it said is "disappointing".
Cineworld slumped 22%. Peel Hunt cut the cinema operator to Hold from Buy, citing attendance concerns over coronavirus.
"Our previous pre-coronavirus position was that cinema attendance would maintain its previous gradual declining trend, and that would be sufficient for Cineworld to re-equitise as it paid down debt. This now appears unlikely for the balance of this year," said Peel Hunt.
By Lucy Heming; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
CapitaStandard CharteredEvrazMelrosePersimmonITVCINE.L