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(Alliance News) - London stocks slumped on Tuesday on worries over the spread of a new strain of coronavirus in Asia after confirmation it can be passed on between humans.
The overseas earnings-heavy FTSE 100 was also hindered as the pound rose on a solid UK jobs report for November.
The blue-chip FTSE 100 index was down 78.40 points, or 1.0%, at 7,573.04. The FTSE 250 was down 144.26 points, or 0.7%, at 21,702.78, and the AIM All-Share was down 0.2% at 961.31.
The Cboe UK 100 was down 1.0% at 12,832.06, the Cboe UK 250 was down 0.6% at 19,577.53, and the Cboe Small Companies down 0.6% at 12,383.98.
In European equities on Tuesday, the CAC 40 in Paris was down 1.1%, while the DAX 30 in Frankfurt was down 0.5%.
"Fears of an extended outbreak of a new strain of Coronavirus in Asia has been driving moderate risk-off behaviour across the board, especially with markets walking into Chinese New Year at the end of the week, a period well-known for increased cross-border travel," said Bethel Loh, macro strategist at ThinkMarkets.
The coronavirus, which has spread to three other Asian countries and infected more than 200 people in China, has caused alarm because of its genetic similarities to Severe Acute Respiratory Syndrome, or SARS, which killed nearly 650 people across mainland China and Hong Kong in 2002-2003.
Health authorities in the central city of Wuhan, where a seafood market has been identified as the centre of the outbreak, said Tuesday that an 89-year-old man became the fourth person to die from the virus and that 15 medical staff had been infected.
The virus has also reached Japan, Thailand and South Korea, with a total of four people having been hospitalised after visiting Wuhan.
Zhong Nanshan, a renowned scientist at China's national health commission, confirmed that the virus was being transmitted between humans, state media reported late Monday.
"Should the Coronavirus in some way, shape or form reproduce the severity of the crippling SARs outbreak seen during 2003, the souring of risk sentiment might not be as temporary as most probably think," said ThinkMarkets's Loh. "Perhaps, we could see it extend for some time as the economic ramifications become clearer."
The spread of the virus saw stocks in China end firmly lower overnight, with the SSE Composite index in Shanghai finishing down 1.4% while the Hang Seng in Hong Kong shed 2.8%.
Re-opening from the Martin Luther King holiday on Monday, the US is also set for a lower session. The Dow Jones is called down 0.3%, the S&P 500 down 0.4% and the Nasdaq on course to shed 0.5%.
The FTSE 100, down amid coronavirus worries, was also hampered as the pound rose on a largely solid jobs report.
The seasonally adjusted UK unemployment rate was stable at 3.8% in the three months to November, matching consensus, according to FXStreet.
The employment rate in the three months to November was estimated at a record high of 76.3%, 0.6 of a percentage point higher than a year earlier and 0.5 of a percentage point up on the previous quarter.
Growth in average earnings in the three months to November was unchanged at 3.2% for total pay, which includes bonuses. Regular pay growth, which strips out bonuses, slowed to 3.4% from 3.5%. FXStreet consensus had forecast total pay growth of 3.1% and regular pay growth of 3.4%.
"The larger-than-expected rise in employment in November suggests that the labour market is not getting any worse and may have even started to turn around. That could help to convince the Monetary Policy Committee to hold off cutting interest rates at the end of the month," said Capital Economics.
The pound was quoted at USD1.3054 at midday Tuesday, compared to USD1.2998 at the close on Monday.
Elsewhere in the forex space, the euro stood at USD1.1109 at midday Tuesday, against USD1.1083 late Monday. Against the yen, the dollar was trading at JPY110.04 compared to JPY110.15 late Monday.
In commodities, Brent oil was quoted at USD64.12 a barrel midday Tuesday from USD65.18 late Monday. Gold was quoted at USD1,555.75 an ounce against USD1,560.87 at the close on Monday.
In London, luxury retailer Burberry, which is exposed to the Chinese market, was down 3.3% amid coronavirus fears. In Paris, peers Kering and LVMH were down 4.1% and 2.9% respectively.
easyJet soared to the top of the FTSE 100, up 4.3% after reporting growth in first quarter revenue.
In the first quarter of financial 2020, ended December 31, easyJet said its total revenue grew 9.9% year-on-year to GBP1.43 billion, with passenger revenue rising 9.7% to GBP1.12 billion and ancillary revenue adding 11% to GBP301 million.
Passenger numbers in the first quarter increased by 2.8% to 22.2 million, with capacity increasing 1.0% to 24.3 million seats. Load factor was up 1.6 percentage points to 91.3%. Airline revenue per seat increased by 8.8%, exceeding management expectations.
Revenue per seat in the first half is guided to grow by mid to high single digits - versus previous guidance of low to mid single digits. The airline's revenue per seat in the first half financial 2019 was GBP50.71.
Other airline operators were lower on Tuesday, however. British Airways parent International Consolidated Airlines was down 3.9% while in Frankfurt, Lufthansa shed 2.8% and in Paris, Air France KLM was down 3.1%.
"With airports on red alert looking for the virus on passengers flying in and out of regions, it begs the question: how much economic damage can be caused if Coronavirus develops into a SARS-like pandemic," said ThinkMarkets's Loh.
"Immediately, European airlines and airports stand to bear the brunt of the consequences that result from arguably less consumer demand to fly, use airports or travel outside of one's home country," said Loh. "In particular, airlines and airports that make a significant portion of revenues from cross-continental travel between Europe and Asia are likely to experience a bigger sell-off given higher risk premiums."
In the FTSE 250, Dixons Carphone was up 4.8% after reporting solid UK trading in the key festive season.
Dixons' revenue for the 10 weeks to January 4 was 2% higher on a reported basis, but was flat like-for-like. UK & Ireland Electricals revenue was 1% higher on a reported basis and up 2% like-for-like. However, Dixons posted an 11% drop in UKI Mobile revenue, with the like-for-like figure falling by 9%.
"We've had a good peak in a weak UK market and we're on track to deliver what we promised for this year, and with our longer-term transformation," said Chief Executive Alex Baldock.
SSP rose 3.0% as it posted a "good" start to its financial year despite travel disruption.
London-based SSP operates food and beverage outlets in transport locations such as airports and train stations. Brands include baguette-maker Upper Crust and cafe chain Ritazza.
Revenue in the first quarter ended December rose 7.5% constant currency, with the figure rising by 6.1% at actually currency rates. Like-for-like sales growth at constant currency was 1.2%.
Like-for-like sales in continental Europe were hit by transport strikes across France during December, while the company's also saw disruption in Hong Kong.
By Lucy Heming; lucyheming@alliancenews.com
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