UK stocks slump as coronavirus spreads and trade tensions mount

Thu, 23rd Jan 2020

Major UK indexes closed firmly in the red on Thursday as coronavirus worries and trade tensions gripped investors. The benchmark FTSE 100 index fell for the fourth day straight, running up a near 0.9% loss as it plunged to 7,507.67, its lowest so far in 2020. The decline of the FTSE 250 was even deeper, the mid cap index falling more than 1% to 21,540.56. UK investors have clearly been spooked by the emerging threat of the coronavirus, which may have landed on British shores, with several people in Scotland being tested. Authorities in China, where the virus originated, have already suspended planes and trains in and out of Wuhan, a city of 11m people, and the travel clampdown has also spread to nearby Huanggang, home to another seven million. There are more than 500 confirmed cases of the coronavirus, which has already claimed the lives of nearly 20 people. Concerns of a possible escalation of a trade dispute between the US and Europe did not help soothe the mood. Major markets in the US, Europe and Asia were also down sharply. AIRLINE STOCKS IN THE FIRING LINE On the UK market, the international travel worries caused by the coronavirus had a predictable impact on airline stocks, with budget flyers EasyJet and Ryanair both off around 3%, although BA-owner International Consolidated Airlines felt the pinch more, seeing roughly half a billion pound wiped off its market value as the share price sank around 4% to 6.9p. Retail remains firmly in focus after online fashion player ASOS posted better-than-expected revenue. In the four month period encompassing Christmas, the company revealed at 20% jump in sales thanks to a record Black Friday performance. ASOS shares jumped more than 9% to close at £33. Also in the space, baby products specialist Mothercare slumped 7% to 15.5p on a reshuffling of senior management with chief executive Mark Newton-Jones stepping down, and finance chief Glyn Hughes taking over as interim chief executive. The company said its recapitalisation remains on track as it refocuses on international markets. But more upbeat is chocolatier Hotel Chocolat after the company reported revenue growth of 11% for the 13-weeks to 29 December, and 14% for the 26 weeks. The company said that trading remains in-line with management's expectations. The positive update was slightly spoiled by the comment that 'the cost to deliver this growth was modestly higher due to inefficiencies in the supply chain which are being addressed in 2020' pushing the shares down 4% to 410p. Going the other way, IT reseller Computacenter nudged up 9p to £17.68 after it said it expected to report record profit and revenue and reiterated expectations that annual performance would be within the upper end of current market forecasts. The company said full year results would show its 'best ever' revenue, profit, earnings per share and cash generation. Total revenue for the group grew by 16% and by 17% in constant currency. Computacenter shares have rallied nearly 44% since October. PROPERTY STOCKS IN FOCUS PPHE Hotel's share price dropped 2% to £20.20 in spite of the company reporting a 6.3% rise in like for life room revenue for the year ended December 31, 2019, in its latest trading update. Room revenue for the year increased by 5.9% to £250m, while like-for-like RevPAR for the year grew 5.1% to £103.7, driven by like-for-like occupancy growth of 130bps to 80.7% and like-for-like average room rate growth of 3.4% to £128.5. The trading benefits from the £100m plus multi-year investment and repositioning programme are starting to come through, following the launch of Holmes Hotel London in May, and the reopening of Park Plaza Vondelpark, Amsterdam and Park Plaza Utrecht in October. Meanwhile, Unite has received resolution to grant planning permission for its 416-bed student accommodation in Bristol city centre. The plans incorporate the conversion of the former Georgian hospital building into 62 rented residential homes. The company's share price dipped 1% to £12.88. Robot process automation designer Blue Prism saw its share price soar roughly 22% to £15 after upping full year guidance and impressing investors with its pathway to positive cash flow and profits strategy. US-based hospitals finance software specialist Craneware plunged 13% to £20.40 as it steered investors to expect flat revenue growth for 2019 after losing a major client. But it does anticipate an improved EBITDA performance of about 10% on 2018. Story provided by StockMarketWire.com

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