5th Mar 2020 08:31
(Alliance News) - Despite strong trading in the US and Asia overnight, the FTSE 100 was flat in early trade on Thursday with gains for Aviva and Melrose offset by a number of ex-dividend stocks.
The FTSE 100 index was down 10.69 points, or 0.2%, at 6,804.90 early Thursday. The mid-cap FTSE 250 index was up 25.02 points, or 0.1%, at 19,767.85 and the AIM All-Share index was up 0.3% at 888.33.
The Cboe UK 100 index was flat at 11,523.91. The Cboe 250 was up 0.2% at 17,665.25, and the Cboe Small Companies up 0.1% at 11,648.72.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were both up 0.5%.
Stocks in New York and Asia overnight had been bolstered by spending commitments in the face of coronavirus.
US lawmakers in Congress on Wednesday agreed to provide more than USD8 billion to fight the rapidly spreading disease.
"But the Big Kahuna comes from the IMF after they unveiled a USD50 billion package of emergency financing for countries harmed by the coronavirus. While the IMF is usually viewed as a lender of last resort but being one of the first out of the gate with policy action will go a long way to set precedent, and we should expect more G-7 policymakers to follow in lockstep," said Stephen Innes at AxiCorp.
"Indeed, investors are bullishly anticipating additional coordinated policy action from central banks and more significant budget spending from G-7 governments to support the global economy," Innes said.
In Asia on Thursday, the Japanese Nikkei 225 index ended up 1.1%. In China, the Shanghai Composite closed up 2.0%, while the Hang Seng index in Hong Kong ended up 2.1%.
Sterling was quoted at USD1.2897 early Thursday, higher than USD1.2812 at the London equities close on Wednesday.
The euro traded at USD1.1130 early Thursday, soft against USD1.1141 late Wednesday. Against the yen, the dollar was quoted at JPY107.24 versus JPY107.25.
Brent was trading at USD51.25 a barrel early Thursday, lower than USD52.17 late Wednesday. Gold was quoted at USD1,639.54 an ounce early Thursday, down from USD1,643.40 on Wednesday.
Aviva surged to the top of the FTSE 100 in opening trade, up 5.2%.
The 2019 results are Maurice Tulloch's first as chief executive. Tulloch, formerly the head of Aviva's International Insurance unit, was promoted a year ago, around the same time as th e2018 results.
Aviva posted a statutory pretax profit of GBP3.93 billion for 2019, more than double the GBP1.65 billion reported a year prior. This was helped by a GBP40.58 billion investment income, after a GBP10.91 billion loss in 2018. Taking into account a change to accounting standards, Aviva's pretax profit rose 58% to GBP3.37 billion.
Operating profit for the year was 6% higher at a record GBP3.18 billion, Aviva reported, beating market consensus of a figure of GBP3.10 billion.
Melrose Industries was up 4.1% after the industrial turnaround specialist said its 2019 results were "comfortably ahead" of expectations.
Revenue for the year jumped to GBP10.98 billion from GBP8.15 billion in 2018, while it swung to a pretax profit of GBP106 million from a GBP542 million loss.
GKN Aerospace sales grew by 7% in 2019, and the division's adjusted operating margin rose to 10.6%, up from 9.9% in 2018. GKN Automotive sales fell by 6% with a margin of 7.7% versus 6.8% in 2019.
Melrose said it has appointed advisers to explore "strategic options" for the Nortek Air Management business.
ITV shares fell 2.3% as it reported a better-than-expected advertising revenue outturn, though noted travel advertising deferments amid the coronavirus outbreak.
Total external revenue was up 3% to GBP3.31 billion while total advertising revenue was down 1.5%, having been guided to fall 2%.
Pretax profit for the year fell to GBP530 million from GBP567 million, though, as operating costs increased to GBP2.77 billion from GBP2.61 billion.
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.
Britbox UK is on plan, ITV said, following the launch of the video streaming service in November.
Bunched at the bottom were a number of ex-dividend stocks, including Russian steelmaker Evraz, down 8.5%, housebuilder Persimmon, down 3.7%, and lender Standard Chartered, down 3.2%.
At the bottom of the FTSE 250 was exhibitions and conferences firm Hyve, sinking 9.6% on a profit warning.
It expects a hit between GBP17 million to GBP19 million on revenue in the current financial year, translating to a GBP16 million to GBP18 million dent in profit.
This comes as it has had to postpone events, particularly in Asia, also noting that US companies are discouraging business travel, including conference attendance.
Hyve added that it has already booked GBP200 million in revenue for the current financial year, and it continues to be "highly cash generative".
Stobart Group was down 3.2% following the collapse of regional airline Flybe.
The airline announced in the early hours of Thursday it had ceased trading with immediate effect and that administrators had been appointed. Crisis talks were held throughout Wednesday to try to secure a rescue package, but no deal was agreed.
Flybe was bought by a consortium called Connect Airways, made up of Virgin Atlantic, Stobart Group Ltd and Cyrus Capital, in February 2019, after running into earlier financial problems.
"Stobart Group's initial investment was made up through the sale of Stobart Air and its aircraft leasing business, Propius. As a result, the non-cash balance sheet impact on Stobart Group is GBP43.3 million and the additional GBP7m investment made in 2020. The value of both these investments will now be written down to nil on its balance sheet," said Stobart.
Stobart added that Flybe had shown "promising signs of a turnaround", but the impact of Covid-19 on Flybe's trading means the consortium "can no longer commit to continued financial support".
"As a result of this news, London Southend Airport will see a short-term impact, with Flybe having planned to operate ten routes from the airport from Spring of this year. However, the long-term prospects of that airport remain compelling," said Stobart, which operates the airport in question.
By Lucy Heming; [email protected]
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