23rd Jan 2020 07:45
(Alliance News) - Stock prices in London were set to open lower on Thursday as China locked down the city of Wuhan, the centre of an outbreak of coronavirus.
Meanwhile, focus in Europe in the day ahead is on the European Central Bank's latest monetary policy decision at midday.
In early UK company news, Anglo American held its production guidance for 2020, ASOS delivered an "encouraging" start to the financial year, and CMC Markets said its final quarter has started well.
IG says futures indicate the FTSE 100 index of large-caps will open 14.22 points lower at 7,557.70 on Thursday. The FTSE 100 index closed down 38.78 points, or 0.5%, at 7,571.92 on Wednesday.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 1.0%. In China, the Shanghai Composite ended down 2.8%, while the Hang Seng index in Hong Kong is down 1.9%.
"Risk is trading on the back foot again amid concerns regarding China's deadly coronavirus. And with the Shanghai Composite trading below the psychologic 3,000 levels, the first time since late December, traders are back scrambling to cover downside risk in equities," said Stephen Innes, chief market strategist at AxiCorp.
The Shanghai Composite closed at 2,976.53 on Thursday.
China banned trains and planes from leaving a major city at the centre of a virus outbreak on Thursday, seeking to seal off its 11 million people to contain the contagious disease that has claimed 17 lives, infected hundreds and spread to other countries.
Authorities in Wuhan, a major transport hub, also suspended public buses and subways, and said residents should not leave "without a special reason".
More than 570 people have been infected with the virus across China – with most cases found in Wuhan, where a seafood market that illegally sold wild animals has been identified as the epicentre of the outbreak.
The coronavirus has caused alarm because of its similarity to Severe Acute Respiratory Syndrome, or SARS, which killed nearly 650 people across mainland China and Hong Kong in 2002 and 2003. Like SARS, this new virus can be passed among people through the respiratory tract.
The World Health Organization on Wednesday delayed a decision on whether to declare a global health emergency – a rare instrument used only for the worst outbreaks. The emergency committee will meet again on Thursday, after its chair, Didier Houssin, said the experts were split over declaring a public health emergency.
AxiCorp's Innes added: "US equity markets wobbled into the close as the potential negative economic impact of the Wuhan coronavirus could undermine risk sentiment well into February given comparison still being made to the SARS."
In the US on Wednesday, Wall Street ended broadly flat, with the Dow Jones Industrial Average and the S&P 500 broadly unchanged and the Nasdaq Composite rising 0.1%.
In early UK company news, Anglo American held all production guidance for 2020 after meeting targets for 2019.
Anglo American's copper equivalent production for 2019 was 4% higher than the year before, boosted by the Minas Rio iron ore operation in Brazil, which ramped up after being shut down in 2018 due to pipeline leaks. Copper production in the fourth quarter of 2019 was 159,000 tonnes, 13% lower than the year prior, with the annual figure down 5% at 638,000 tonnes.
Diamond production from Anglo's De Beers was 15% lower at 7.8 million carats, with the annual figure falling by 13% on 2018 to 30.8 million carats.
Minas Rio in Brazil produced 6.2 million tonnes of iron ore in the fourth quarter, having produced a minimal amount the year before, with production only restarting at the end of 2018.
"We have delivered our full-year production targets across the business. Production is up 4% for the quarter led by the continued successful ramp-up at Minas Rio in Brazil," said Chief Executive Mark Cutifani.
Computacenter said it remains comfortable with the upper end of current market expectations as it reported growth in revenue for 2019.
Total revenue grew 16% in 2019, with organic revenue up 3%.
In the UK, revenue was broadly flat, though the company saw strong margin growth in both its Technology Sourcing and Services businesses. Computacenter said it saw good growth in German despite the country's "well-publicised industrial slow-down".
France delivered its largest ever profit contribution to the group in 2019, while its US operations recovered strongly in the second half.
The company said: "Not only have we recorded our best ever revenue, profit, earnings per share and cash generation from ongoing operations, but we have increased our profitability by the largest absolute amount ever."
"The results of 2019 set a high bar for the business as we go into 2020. However, we go into the year with confidence, helped by the strong momentum within the group and the broader market," added Computacenter.
Online retailer ASOS said it delivered an "encouraging" start to the financial year with sales up 20%.
For the four months to December 31, retail sales grew 20% to GBP1.07 billion, with revenue up 20% as well to GBP1.11 billion.
UK retail sales grew 18% to GBP408.9 million, while international sales were up 22% to GBP666.0 million. Total orders were up 20% to 27.7 million.
The group's gross margin, though, was down 170 basis points, reflecting US duty and its investment in customer acquisition.
"As we said in October, the focus for this year is to further enhance our capabilities and leverage the investments we have made. It is still early in the year and much remains to be done, but we are encouraged by the progress we have made so far," said Chief Executive Nick Beighton.
Daily Mail & General Trust said first quarter trading was in line with expectations, with underlying revenue up 1%.
In the Consumer Media division - which houses newspapers the Metro, the Daily Mail and the Mail on Sunday as well as MailOnline - underlying revenue grew 2%, including a 17% rise in digital advertising and even a 3% rise in print advertising, in what the company called a "benign market environment".
Reported revenue was up 2%, as a 3% decline in circulation on a reported basis was offset by a 10% rise in advertising. Reported revenue included one month's trading for recent acquisition, the 'i' newspaper. This purchase in being reviewed by UK competition authorities.
DMGT maintained its outlook for the current financial year, expecting revenue to be broadly stable on an underlying basis.
PPHE Hotel Group said it delivered a "solid" fourth quarter as it reported revenue per available room growth.
Like-for-like room revenue for the year grew 6.3% to GBP249 million, while reported room revenue was up 5.9% to GBP250 million.
Like-for-like RevPAR - revenue per available room - was up 5.1% to GBP103.7, driven by like-for-like occupancy growth of 130 basis points to 80.7%. Reported RevPAR was up 6.0%.
"We are on-course to continue our track record of delivering growth and results in-line with expectations," said President & Chief Executive Boris Ivesha.
Ivesha continued: "We are well positioned for future growth as we drive the performance of our well-invested estate and build out our more than £300m planned development pipeline across the UK, Europe and the US."
Spread betting platform CMC Markets said its fourth quarter has started well, and net operating income for the current financial year is expected to be ahead of consensus.
Net operating income continued to outperform expectations in the third quarter, the contracts-for-difference trading provider said. This was driven by a higher retention of client income which results in an increase in revenue per active client despite lower client income.
The final three months of the year have started well, and CMC said it remains confident in its "ongoing strong revenue performance" for the full-year. Net operating income is expected to be ahead of the upper end of the current range of analyst forecasts, it added.
In forex, sterling was quoted at USD1.3134 early Thursday, soft on USD1.3137 at the London equities close on Wednesday.
The euro was trading at USD1.1089 early Thursday, firm versus USD1.1073 late Wednesday. Against the yen, the dollar was quoted at JPY109.59, down from JPY109.90.
Gold was at USD1,556.28 an ounce early Thursday, soft on USD1,557.45 on Wednesday. Brent was quoted at USD62.30 a barrel Thursday, lower than USD63.14 late Wednesday.
In the economic calendar on Thursday, the European Central Bank's interest rate decision is at 1245 GMT which will be followed by a press conference with President Christine Lagarde at 1330 GMT.
"From an immediate policy perspective, there will probably be nothing new; the ECB is expected to maintain its current monetary policy unchanged at this meeting. What will matter the most to investors is the bank's strategy review, which should give some hints about how things would shape up in the Lagarde era," said Ipek Ozkardeskaya, senior analyst at Swissquote.
Eurozone consumer confidence is at 1500 GMT.
By Lucy Heming; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
DMGT.LComputacenterCMC MarketsASOS