7th Feb 2020 12:03
(Alliance News) - Stocks in London were lower at midday on Friday following a rally in equity markets during the week, as investors take profits and assess the impact of China's deadly coronavirus crisis.
In the latest development, a Chinese doctor who was punished after raising the alarm about the coronavirus died from the pathogen on Friday, sparking an outpouring of grief and anger over a deepening crisis which has now killed more than 630 people.
At least 31,000 people have now been infected by the virus that ophthalmologist Li Wenliang brought to light in late December. The doctor was punished for "rumour-mongering" by Wuhan police after he tried to warn colleagues people had a SARS-like virus.
The disease has since spread across China, prompting the government to lock down cities of tens of millions of people, and panic has spiralled around the globe as more than 240 cases have emerged in two dozen countries. A quarantined cruise ship in Japan now has 61 confirmed cases.
Chinese President Xi Jinping and US President Donald Trump, whose countries have locked horns over trade and human rights, spoke on the phone about the health emergency.
Xi urged "the US side to respond reasonably to the novel coronavirus outbreak", according to the official Xinhua news agency. Trump expressed his "confidence" in China's ability to tackle the epidemic, the White House said.
However, Beijing has been angered by bans on arrivals from China instituted by the US and other countries.
Meanwhile, in light of the coronavirus "hitting China's people and economy hard", S&P Global Ratings now estimates that China's economic growth will slow in 2020.
S&P forecasts GDP growth of 5.0% in 2020, compared with 5.7% before the outbreak, and now expects an above-trend 6.4% growth rate in 2021, compared with its previous forecast of 5.6%.
"Most of the economic impact of coronavirus will be felt in the first quarter, and China's recovery will be firmly in place by the third quarter of this year," said Shaun Roache, Asia-Pacific chief economist for S&P Global Ratings.
"We expect the effect to be more drawn out than in SARS given the longer time to reach peak infections and the more vigorous policy response, especially travel restrictions, in this episode. Household consumption will take the main hit, especially spending on discretionary goods and services as individuals avoid public spaces to minimize the risk of infection," Roache added.
The FTSE 100 index was down 49.00 points, or 0.7%, at 7,455.79 at midday on Friday. However, the large-cap index is on track to end the week higher, up 2.3% since Monday.
The FTSE 250 was down 128.00 points, or 0.6% at 21,444.86, and the AIM All-Share was down 1.97 points, or 0.2% at 962.03
The Cboe UK 100 index was down 0.7% at 12,627.58. The Cboe 250 was down 0.6% at 19,318.41, and the Cboe Small Companies up 0.1% at 12,488.31
In Paris the CAC 40 was down 0.4%, while the DAX 30 in Frankfurt down 0.7%.
"Investors appear to be worried about China's coronavirus once again, after a couple of trading sessions where focus on tariff cuts, a potential vaccine, and economic stimulus generated more positive sentiment. The number of cases has passed 30,000, a doctor who was a prominent whistleblower at the outset of the crisis has died, and ratings agency S&P has cut its forecast for economic growth in China in 2020," commented AJ Bell's Russ Mould.
On the London Stock Exchange, Vodafone was the best blue-chip performer, up 2.2% after Jefferies upgraded the telecommunications firm to Buy from Hold.
At the other end of the large cap index, Hargreaves Lansdown was off 5.2% at 1,620.00 pence after the stockbroker's co-founder Peter Hargreaves sold GBP550 million worth of stock, via an accelerated share bookbuild offering to institutional investors. He sold 34.4 million shares at a price of 1,600.00p per share.
Following the sale, Peter Hargreaves still holds an interest in about 24% of the company's issued share capital. The placing was extended from the original GBP500 million Hargreaves was hoping to raise due to "strong investor demand".
Burberry was down 1.3% after the fashion house said the outbreak of coronavirus in China is having a negative effect on demand for its luxury goods. Burberry said 24 of its 64 stores on the Chinese mainland are closed, with the remaining stores experiencing a significant decline in customer visits.
Despite the spending patterns of Chinese customers across Europe not being affected, Burberry said it expects the situation to worsen due to widening travel restrictions. The company noted that the benefit of actions taken to mitigate the negative impact will be limited due to the proximity to the end of its financial year in March.
The pound was quoted at USD1.2930 at midday, flat from USD1.2933 at the London equities close Thursday.
The euro stood at USD1.0953 at midday, lower than USD1.0980 at the European equities close Thursday. Against the yen, the dollar was trading at JPY107.77, down from JPY109.96 late Thursday.
Stocks in New York were set for a lower open on Friday, ahead of the closely watched US jobs report for January at 1330 GMT.
The DJIA was called down 0.4%, the S&P 500 index down 0.4% and the Nasdaq Composite down 0.5%.
Market consensus, cited by FXStreet, expects the US economy to have added 160,000 new jobs in January, while the unemployment rate is forecast to hold steady at 3.5%.
"The big question is whether [the nonfarm payroll data] will be strong enough to move the markets up further from the current levels. This may be an essential step not only for the US indices but also for the dollar. The dollar index is only 1% below last year's peak levels. Healthy labour data can be a necessary factor to push the dollar to further growth and not to negate the strengthening of stock indices in the short-term," analysts at FXPro said.
Uber Technologies will be in focus on Friday after the hail riding company's quarterly update late Thursday showed it moving on a path to profitability faster than expected.
The San Francisco-based company still lost USD1.1 billion on revenue that increased 41% to USD3.7 billion when compared to the same period a year earlier. However, Uber beat earnings targets consistently last year, with the help of spending discipline and money made from the sale of an Eats food-delivery service in India, according to Chief Financial Officer Nelson Chai.
The stock ended up 0.8% on Thursday and is up 6.3% in pre-market trade in New York on Friday.
Brent oil was quoted at USD54.70 a barrel at midday, down from USD55.14 at the London close Thursday.
Gold was quoted at USD1,567.80 an ounce at midday, firm against USD1,563.48 late Thursday.
By Arvind Bhunjun; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
BurberryHargreaves LansdownVodafone