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(Alliance News) - Stocks in London ended mixed on Friday as investors contemplated the risks of the ongoing spread of the coronavirus and the potential effects it will have on the global economy.
A dramatic rise in the number of deaths and new cases of the virus on Thursday fuelled global suspicions that Beijing was concealing the true scale of the illness.
The FTSE 100 index closed down 42.90 points, or 0.6% at 7,409.13, ending the week down 0.8%.
The FTSE 250 ended up 116.18 points, or 0.5% at 21,790.08, ending the week up 1.4%, and the AIM All-Share closed flat at 965.71, but ended the week up 0.4%.
The Cboe UK 100 ended down 0.4% at 12,544.38, the Cboe UK 250 closed up 0.6% at 19,658.95, and the Cboe Small Companies ended up 0.2% at 12,485.92.
In Paris the CAC 40 ended down 0.4%, while the DAX 30 in Frankfurt ended flat.
IG Group's Chris Beauchamp said: "So far, Fridays in 2020 have not been great for equities, and today has not been much different thus far. US markets have opened on the back foot, although they are showing signs of life, while the FTSE 100 continues its disappointing run of form. Given the semiconductor index is up 10% from its lows, it looks like the market has come to terms with the coronavirus outbreak, particularly since yesterday's headlines about a spike in cases have not seen much follow-through.
"But the weekend provides plenty of scope for unpleasant surprises, hence the cautious attitude displayed by risk assets on most Fridays in the year so far. But it has been yet another week where downside has failed to materialise in any real fashion, leaving investors with nothing to do but keep buying into the rally."
On the London Stock Exchange, Royal Bank of Scotland closed down 6.8% as the worst performer after the state-backed lender attempted to escape the sins of the past under disgraced former boss Fred Goodwin, by changing its name.
RBS, which was bailed out by the UK government after the financial crisis in 2008, said Friday it would rebrand itself NatWest Group, but did not offer any further details on the name change, only saying that it will happen "later this year".
The investment bank already is called NatWest Markets. RBS said it will look to "refocus" the investment bank, halving its assets.
For 2019, profit and net interest income beat expectations. The bank's operating pretax profit increased 26% to GBP4.23 billion from GBP3.36 billion in 2018. Operating pretax profit, according to company-compiled consensus, was forecast at GBP3.77 billion. Attributable profit for 2019 came in at GBP3.13 billion, compared to consensus of GBP2.52 billion. In 2018, when RBS reported its second profit in a decade, the figure was GBP1.62 billion.
The bank declared a final ordinary dividend of 3p and announced a 5p special dividend, taking its total 2019 distribution to 22.0p. Company-complied consensus had expected RBS to pay a special dividend of 17.4p and a total dividend of 23.5p.
The bank's net interest margin slipped in 2019 to 1.99% versus 2.09% in 2018. The lender's falling margins were blamed on "competitive pressures in the mortgage business" as front book margins remain lower than back book, referring to recent loans versus ones made previously.
Peers Barclays and Lloyds Banking Group ended down 0.4% and 2.3% respectively in a read-across.
NMC Health ended down 5.3% as the second worst performer after the embattled private healthcare group announced the resignation of Vice Chair Khalifa Butti Omeir Bin Yousef with immediate effect amid a legal review.
The UAE-focused private hospital operator suspended Omeir Bin Yousef on Monday, asking him and Joint Non-Executive Chair Bavaguthu Raghuram Shetty to "absent themselves from further board discussions".
NMC on Friday urged Shetty and other investors to clarify their shareholdings in the company, as it laid out complex share dealings made by Shetty. The Abu Dhabi-based firm said advisers of now-resigned vice chair Bin Yousef and another investor Saeed Butti Al Qebaisi provided information of their shareholdings in NMC, which NMC said has not been independently "verified or confirmed to the company by Shetty".
The pound was quoted at USD1.3028 at the London equities close, down from USD1.3045 at the close Thursday, managing to hold on to its gains from Thursday following the shock resignation of Sajid Javid as UK chancellor of the exchequer.
The member of parliament for Bronsgrove's seven-month stint as finance minister was dogged by rumours of bad blood with Johnson's chief political adviser Dominic Cummings.
Number 10 sources suggested Javid was forced out as Johnson wanted to avoid a repeat of the infamously fractious relationship between then-prime minister Tony Blair and his chancellor Gordon Brown - which caused a divide at the heart of Blair's Labour government.
Javid's resignation comes just a month before he had been due to deliver his first annual budget on behalf of Johnson's Conservative administration.
Johnson swiftly appointed senior Treasury official Rishi Sunak to succeed Javid as chancellor alongside a sweeping Cabinet reshuffle on Thursday, which saw many prominent ministers lose their posts.
Javid on Friday accused the PM of setting conditions "any self-respecting minister" would reject - seen as a thinly veiled swipe at his successor.
Capital Economics said the promotion of Sunak raises the chances that a relaxation of the fiscal rules allows government policy to boost the economy over the next few years.
Analysts at Capital Economics said: "It does seem as though Sunak shares more of Prime Minister Boris Johnson's ambitions than Javid. Javid voted against leaving the EU and there were rumours that he was unwilling to countenance the prime minister's spending plans. Sunak is a Brexiteer, supports lower taxes and higher infrastructure spending.
"We may be reading too much into this. It's possible that nothing will be different apart from the person making the fiscal announcements. But equally, there's no point in changing the Chancellor if you don't want anything to change (it appears as though Javid was deliberately put in a position that would either significantly reduce his influence or force him to resign). Ultimately, we suspect that Javid was unwilling to bend his fiscal rules to allow the prime minister to implement his political plan to spend big in order to 'level up' the regions."
The euro stood at USD1.0842 at the European equities close, marginally lower from USD1.0850 a day before, holding at the USD1.08 mark as the spectre of recession in Germany re-emerged.
Europe's largest economy Germany stuttered in the fourth quarter of 2019 as its export-oriented industry's woes continued to weigh on growth, official data showed.
Gross domestic product in Germany was flat quarter-on-quarter in October-December, federal statistics authority Destatis said, disappointing the agency's own expectations.
The statisticians also revised their third quarter growth figures, saying that GDP had added 0.2% rather than 0.1%.
Over the whole year, the annual growth rate of 0.6% was Germany's worst since 2013.
The economy "remains in a weak phase," the economy ministry in Berlin said, highlighting "very weak" industrial production and incoming orders for manufacturing firms towards the end of the year.
Analysts at Societe Generale said: "We expect industrial production to bounce back in January and first quarter on the back of the steep decline in December and fourth quarter. In recent years, most of the larger month-on-month declines (of over 2%) have been fully recovered within a few months. Similarly, household consumption has contributed erratically to growth, despite a very stable increase in real disposable income of around 2% since 2015.
"We thus expect household consumption to boost GDP more strongly in the first quarter. The investment outlook remains more uncertain, but at least construction should retain some momentum driven by strong housing demand. It could therefore take until our forecasted US recession later this year for Germany to move into recession."
Against the yen, the dollar was trading at JPY109.77, flat from JPY109.80 late Thursday.
Stocks in New York were mostly higher at the London equities close, the DJIA was down 0.1%, while the S&P 500 index and the Nasdaq Composite were both up 0.2%.
On the economic front, US consumers resumed buying autos in January and took advantage of mild weather to boost purchases of building materials, pushing up overall retail sales, according to the Commerce Department.
Total retail sales for January rose 0.3% monthly as expected to USD529.8 billion, seasonally adjusted, the Commerce Department reported. The gain was the same even when excluding vehicles and parts.
That put total sales up 4.4% over January 2019, according to the data.
Brent oil was quoted at USD57.15 a barrel at the equities close, up from USD56.30 at the close Thursday. The North Sea benchmark is up 5.0% over the past week.
"The oil recovery is gathering momentum as the week draws to a close. Naturally, any bounce was likely to be decent given the scale of the declines that preceded it but we're now on the fourth day of gains as optimism grows among traders that the fight against COVID-19 has turned a corner, despite the setback of the midweek spike," said OANDA markets analyst Craig Erlam.
Gold was quoted at USD1,581.60 an ounce at the London equities close, firm against USD1,574.60 late Thursday.
The economic events calendar on Monday has Japan GDP and UK Rightmove house price index data overnight. US financial markets will be closed on Monday for the Presidents Day holiday.
The UK corporate on Monday has interim results from diamond miner Petra Diamonds.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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