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(Alliance News) - Stocks in London ended sharply lower on Thursday due to a strong rise in deaths from the coronavirus outbreak in China.
China has reported 1,367 deaths and nearly 60,000 infections from the virus known as COVID-19, which also claimed its first victim in Japan and caused Vietnam to place 10,000 people under quarantine after six cases of the disease were discovered in a cluster of villages.
Under criticism at home over the handling of the crisis, China's Communist Party sacked two top-ranking officials in Hubei province, the epicentre of the outbreak. The developments came hours after President Xi Jinping claimed "positive results" from efforts to contain an epidemic that has now officially killed 1,367 people and infected nearly 60,000. But the World Health Organization warned it was too soon to declare victory.
The FTSE 100 index closed down 82.34 points, or 1.1%, at 7,452.03. The FTSE 250 ended down 119.58 points, or 0.6%, at 21,673.90, and the AIM All-Share closed down 3.49 points, or 0.4% at 965.98.
The Cboe UK 100 ended down 1.3% at 12,595.55, the Cboe UK 250 closed down 0.5% at 19,547.50, and the Cboe Small Companies ended down 0.2% at 12,455.94.
In Paris the CAC 40 ended down 0.2%, while the DAX 30 in Frankfurt ended flat.
On the London Stock Exchange, Coca-Cola HBC ended the best performer, up 3.6% after the soft drinks bottler hailed 2019 as a strong year of earnings growth.
The company, which bottles Coca-Cola and other soft drinks, reported a 3.3% volume rise to 2.26 billion unit cases in 2019 from 2.2 billion in 2018. Net sales revenue was up 5.5% to EUR7.0 billion from EUR6.6 billion a year ago.
Operating profit jumped 12% to EUR715.3 million from EUR639.4 million a year ago, helped by demand in emerging markets. Pretax profit rose 8.2% to EUR661.2 million compared to EUR610.9 million in 2018.
The company declared a total dividend of EUR0.62 per share, an 8.8% increase on 2018.
RELX closed up 1.6% after the information and analytics provider upped its dividend after reporting growth in annual earnings.
RELX recorded pretax profit of GBP1.85 billion in 2019, up 8% from GBP1.72 billion in 2018, on 5% higher revenue at GBP7.87 billion. The revenue rise was attributed to growth in electronic and face-to-face revenue and the further development of the company's analytics and decision tools, partially offset by a continued decline in print revenue.
The company, formerly known as Reed Elsevier, added it will return a further GBP400 million in 2020 via a new share buyback following the completion of a GBP600 million share repurchase programme in 2019.
RELX proposed a full year dividend of 45.7p, up 9% from 2018.
Languishing at the other end of the large cap index, Centrica ended the worst performer, down 15%. The British Gas owner said revenue slipped and it swung to a pretax loss on sharp impairment costs amid a "challenging environment" in 2019.
The company also slashed its dividend by 58% to 5.0p per share from 12.0p. The company announced the decision to rebase its payout in July, with the cut attributed to changes regarding the UK default tariff price cap, additional pension deficit contributions and restructuring charges.
Revenue slipped 2.0% to GBP26.83 billion from GBP27.38 billion in 2018. Centrica swung to a pretax loss of GBP1.75 billion from a GBP575 million profit the year prior. For 2020, Centrica has guided to adjusted operating cash flow of between GBP1.6 billion to GBP1.8 billion.
"Centrica belongs to this group of 'challenged' FTSE 100 members because the public have been turning their back on the British Gas brand and management seemed to have lost focus in recent years. It has a plan to get back on track but the journey is likely to be very bumpy," said AJ Bell's Russ Mould.
Barclays closed down 1.7% after Chief Executive Officer Jes Staley's professional relationship with Jeffery Epstein overshadowed the bank's annual results.
Barclays reported a sharp rise in annual profit on significantly lower costs, as the lender backed Staley despite his professional relationship with Esptein.
Barclays upped its annual dividend to 9.0 pence, 38% higher than the 6.5p distributed in 2018. In 2019, the bank recorded pretax profit of GBP4.36 billion, 25% higher than the GBP3.49 billion seen in 2018. Market consensus compiled by Barclays saw pretax profit at GBP6.41 billion. Excluding litigation costs, pretax profit was GBP6.21 billion, up 9% year-on-year.
The lender noted its directors, including CEO Staley, will be putting themselves up for re-election as its AGM next month - in line with UK Corporate Governance Code. Barclays said it is aware of the media reports over the past six months that have "highlighted historical links between Staley and Jeffrey Epstein". Barclays noted the relationship between Staley and Epstein was the subject of a UK Financial Conduct Authority enquiry.
Based on the available information, Barclays said it retains "full confidence" in Staley and will be unanimously recommending him for re-election. Staley apologised for the relationship, which he said he "deeply regrets", adding that no contact had been made after he joined Barclays from JPMorgan.
The pound was quoted at USD1.3045 at the London equities close, up from USD1.2975 at close Wednesday, as investors reacted positively to high drama at the heart of the UK government.
With a month to go before the UK budget, Prime Minister Boris Johnson was dealt a blow after Sajid Javid sensationally quit as UK chancellor of the exchequer in a row with Johnson over his closest aides.
The prime minister had been expected to keep Javid amid a sweeping Cabinet reshuffle, which saw many prominent ministers lose their posts, as news of his resignation sent shockwaves through Westminster.
Allies of the former chancellor said the prime minister had ordered him to fire all of his senior aides if he wanted to remain at the Treasury - something Javid refused to do.
His former deputy at the Treasury, Chief Secretary Rishi Sunak, will replace Javid and take on responsibility for the Treasury coffers, having reportedly agreed to a joint Number 10-Number 11 team of advisers.
The bombshell came after long-standing rumours of bad blood between the ex-chancellor and Johnson's closest aide Dominic Cummings. In August, Cummings had fired Javid's aide Sonia Khan and was accused of ordering an armed police officer to escort her off the premises.
Analysts at FXPro told Alliance News: "Investors bet that Rishi Sunak who is more loyal to Prime Minister Boris Johnson will present a more expansionary budget. This news is favourable for the GBP, as it reduces the chances the Bank of England will cut its rates anytime soon, and also creates hopes for stronger economic growth in the coming quarters. On the other hand, the strengthening of the pound increased pressure on the UK stock market."
New Chancellor Sunak has just over three weeks to put together a Budget as the UK seeks to outline new trading arrangements with the European Union next year.
Societe Generale's Brian Hilliard said: "The interpretation of this latest episode by the UK press is that Cummings wanted to exert close control over the spending plans that were going to be announced in the Budget scheduled for 11 March. In other words, Cummings was probably advising Johnson either to spend more than Javid thought was prudent or to focus on a different set of projects.
"I am not convinced that the ousting of Javid changes much except that it cements Johnson's control over the key decisions to be taken on UK policy, if that were ever in any doubt. It is an obvious but telling point that Sunak has only been an MP since May 2015 and his meteoric rise to the new role of Chancellor owes everything to Johnson. He will not have the clout to push back against any of Johnson's plans."
The euro stood at USD1.0850 at the European equities close, down from USD1.0894 late Wednesday.
Stocks in New York were lower at the London equities close amid fears over the coronavirus.
The DJIA was down 0.3%, the S&P 500 index down 0.2% and the Nasdaq Composite down 0.1%.
On the US corporate front, Tesla is to offer up to USD2.3 billion in new shares to "strengthen the balance sheet", the electric carmaker said.
Tesla will be offering USD2 billion worth of common shares in an underwritten public offering. The underwriters also have a 30-day option to buy USD300 million of further stock.
Chief Executive Elon Musk is to buy up to USD10 million of shares, while Oracle Corp co-founder & Chair Larry Ellison will buy up to USD1 million worth of shares.
The stock was up 3.4% on Wall Street.
Tomato ketchup maker Kraft Heinz said annual results were disappointing but is confident the turnaround will soon bear fruit.
Heinz's fourth-quarter net sales fell 5.1% to USD6.54 billion, and organically, they declined by 2.2%. Diluted earnings per share for the quarter were USD0.15 after a USD10.30 per share loss the year before. Adjusted earnings per share dipped 14% to USD0.72.
For the entire year, Heinz posted a 4.9% fall in net sales to USD24.98 billion, with diluted earnings per share USD1.58 following a USD8.36 per share loss in 2018.
The stock was down 8.6% on Wall Street.
On the economic front, US consumer prices rose at their fastest annual rate in over a year, data from the Bureau of Labor Statistics showed.
The consumer price index was up 0.1% in January month-on-month, slower than December's 0.2% rise. Consensus - according to FXStreet - had pencilled in steady 0.2% growth in January.
Year-on-year, prices were up 2.5%, faster than the 2.3% inflation rate recorded for December and ahead of forecasts for a 2.4% rise. Core inflation, which excludes food and energy prices, was up 2.3% year-on-year, in line with December.
"Overall, the big picture is still that core CPI inflation has been broadly stable at a little over 2% for nearly two years, and steady growth in unit labour costs suggests that will continue over the coming quarters. That points to core PCE inflation remaining stuck firmly below the Federal Reserve's 2.0% target. With officials already hinting that they would be in no rush to tighten policy even if inflation were to pick up, we continue to expect interest rates to remain at, or slightly below, current levels for at least the next couple of years," said analysts at Capital Economics.
Against the yen, the dollar was trading at JPY109.80, down from JPY110.00 late Wednesday.
Brent oil was quoted at USD56.30 a barrel at the London equities close, up from USD55.55 at the close Wednesday.
"Oil prices are holding up fairly nicely despite the wave of risk aversion that stemmed from a surge in coronavirus cases. The Russian's have pretty much signalled that everyone is on board for OPEC + delivering deeper production cuts. The final decision comes from the government and that could mean we are just waiting for President Vladimir Putin to secure some additional non-public concessions from the Saudis," said OANDA market analyst Edward Moya.
Gold was quoted at USD1,574.60 an ounce at the London equities close, up from USD1,566.10 late Wednesday, as demand for safe-haven assets increased amid renewed fears over the coronavirus.
The economic events calendar on Friday has GDP readings from Germany and the eurozone at 0700 GMT and 1000 GMT respectively. In the afternoon, there are US retail sales figures at 1330 GMT.
The UK corporate calendar on Friday has annual results from warehouse property investor SEGRO, Anglo-Swedish drugmaker AstraZeneca and from state-backed lender Royal Bank of Scotland Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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