28th Feb 2020 08:48
(Alliance News) - Stock prices in London dropped at the open on Friday, over investor concerns that the coronavirus will prompt a global slowdown, as airlines warned of tumbling demand.
The FTSE 100 index was down 150.62 points, or 2.2%, at 6,645.78 on Friday. Since the week began, the blue-chip index is down 8.2%.
The mid-cap FTSE 250 index was down 566.16 points, or 2.9%, at 19,217.29, and the AIM All-Share index was down 2.9% at 860.86.
The Cboe UK 100 index was 2.5% lower at 11,228.20. The Cboe 250 was down 2.8% at 17,353.30, and the Cboe Small Companies down 0.5% at 11,756.88.
In mainland Europe, the CAC 40 in Paris was down 2.8%, while the DAX 30 in Frankfurt was off 3.5%.
"It seems a reasonable assumption that the coronavirus will not be contained so we are on course for a bear market," said London Capital Group Head of Research Jasper Lawler. "But its hard to see what could provide enough certainty to stop fear winning out before the weekend."
China reported 44 more deaths from the novel coronavirus epidemic on Friday and 327 fresh cases, the lowest daily figure for new infections in more than a month. The death toll now stands at 2,788 in mainland China, according to the National Health Commission.
However, outside of China, the virus is spreading at a faster pace. Nigeria on Friday announced the first confirmed case of the novel coronavirus in sub-Saharan Africa. The case is an Italian citizen who works in Nigeria and returned from Milan earlier this week, Health Minister Osagie Ehanire said in a statement on Twitter.
"The patient is clinically stable, with no serious symptoms, and is being managed at the Infectious Disease Hospital in Yaba, Lagos," Ehanire said.
Italy has become a hotbed of infection in recent days, with the largest outbreak in Europe.
In Asia, the Nikkei 225 index in Tokyo and Shanghai Composite in China both closed down 3.7%. The Hang Seng index closed down 2.5%.
Back in London, Rolls-Royce was the only gainer in the FTSE 100 index, up 5.7% in early trade.
Rolls-Royce said it had a "good" end to 2019 after a "challenging" first half, with revenue rising by 5% to GBP16.59 billion from GBP15.73 billion in 2018. The aircraft engines manufacturer is paying a 11.7p dividend for 2019, unchanged year-on-year.
In the first half of 2019, Rolls-Royce experienced problems with the Trent 1000 TEN jet engine, and fixing those took longer than expected. The aerospace firm had been forced to launch a major maintenance and repair programme after discovering the high-pressure turbine blades on the engine deteriorated faster than anticipated.
Looking ahead, Rolls-Royce said it expects to report underlying operating profit growth of about 15% in 2020. In 2019, this measure rose by 25% to GBP808 million.
"The momentum we gained in 2019 underpins our confidence for the year ahead," said Chief Executive Warren East.
Shares in International Consolidated Airlines Group fell 8.0%, the worst performer in the blue-chip index, after warning that it is currently experiencing demand weakness on Asian and European routes, resulting from the cancellation of industry events and corporate travel restrictions due to corovnavirus.
IAG said it had "good" 2019, despite higher fuel prices hurting its operations during the year. The British Airways parent company reported revenue growth to EUR22.47 billion year-on-year from EUR21.40 billion, but pretax profit fell to EUR2.28 billion from EUR3.49 billion amid higher employee, fuel, engineering and finance costs.
Budget airline easyJet was down 3.6%, also after warning on coronavirus. The company said it has seen "significant" softening of demand and load factors into and out of its northern Italian bases.
As a result, easyJet said it is planning to cancel some flights, particularly those into and out of Italy, while continuing to monitor the situation and adapting its flying programme to support demand.
Rightmove also was among the worst performing large-caps, down 4.3%, despite reporting strong 2019 results. Rightmove delivered 8.0% revenue growth to GBP289.3 million from GBP267.8 million reported a year earlier, beating market consensus of GBP289.1 million.
Rightmove explained that growth was driven by continued improvement in its Agency and New Homes businesses. Average revenue per advertiser was up by GBP83 to GBP1,088 per month.
Underlying operating profit also came in ahead of analysts expectations, at GBP219.7 million, up 8% year-on-year and up 0.5% from GBP218.5 million consensus forecast.
Rightmove hiked its annual dividend by 10% to 4.4 pence.
Looking ahead, Rightmove said it recorded record website traffic in January, giving it confidence that it will make further progress in 2020.
London Stock Exchange started the day 1.4% lower, also despite "strong" financial performance in 2019. LSE said revenue was up 8% to GBP2.06 billion in 2019, as it continued to develop innovative services "in a range of areas".
The stock exchange operator believes the proposed acquisition of Refinitiv will further accelerate its growth, adding data, analytics and multi-asset class capital markets capabilities.
LSE proposed a final dividend of 49.9 pence a share, resulting in a 16% increase in its annual payout to 70.0p.
Looking ahead, LSEG said it remains "well-positioned" for future growth and intends to make further investments in the business, while also controlling costs.
Turning to mid-caps, Plus500 was in the green, up 0.7% on Friday morning. The company reported a "significant" increase in levels of customer trading activity, taking its financial performance during the first quarter to-date "substantially" ahead of the last year.
"It is too early to say what impact this outperformance in the current quarter will have on the outcome for 2020 given heightened levels of volatility in the market may not persist, whilst the impact of Australian regulatory changes previously referred to is yet to be quantified," Plus500 cautioned.
The pound was quoted at USD1.2862 early Friday, soft from USD1.2867 at the London equities close Thursday. The euro was at USD1.1015 early Friday, up from USD1.0984 late Thursday.
Against the yen, the dollar was trading at JPY108.75 early Friday in London, down from JPY110.58 late Thursday.
Gold was quoted at USD1,632.51 an ounce early Friday, lower than USD1,655.10 late Thursday. Brent oil was at USD50.78 a barrel, down from USD51.32.
The economic events calendar on Friday has Germany unemployment and inflation data at 0855 GMT and 1300 GMT respectively In the afternoon, there are US personal consumption expenditure figures at 1330 GMT - the core reading is the Fed's preferred gauge of inflation.
By Evelina Grecenko; [email protected]
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