(Alliance News) - London stocks ended Tuesday firmly in the green as worries over the spread of coronavirus receded, despite the death toll surging to over 1,000.
Helping to boost London's blue-chip index on Tuesday were travel stocks on the back on an upbeat update from TUI, while NMC Health shares gave back some of the previous session's gains after KKR said it does not intend to make an offer for the UAE-focused healthcare firm
The FTSE 100 index closed closed up 52.56 points, or 0.7%, at 7,499.44. The FTSE 250 ended up 152.70 points, or 0.7%, at 21,646.02, and the AIM All-Share closed up 8.39 points, or 0.9%, at 969.92.
The Cboe UK 100 ended up 0.8% at 12,717.98, the Cboe UK 250 closed up 0.7% at 19,517.48, and the Cboe Small Companies ended up 0.2% at 12,421.58.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.7%, while the DAX 30 in Frankfurt ended up 1.0%.
"Global stock markets are on the rise despite ongoing fears over the spread of the coronavirus which has taken over 1000 lives," commented Joshua Mahony, senior market analyst at IG.
"With Chinese businesses seeking hefty loans to account for the effects of the virus, there is no doubt that the Chinese will need to spend big if they hope to emerge from this crisis without long-term economic scars," said Mahony. "With President Xi Jinping promising to achieve their previous economic targets, it is clear that we should expect plenty of stimulus throughout the course of this episode."
Federal Reserve Chairman Jerome Powell said the US central bank is keeping watch for any impact from the virus outbreak in China that could spread beyond its borders.
The Fed is "closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy," Powell said in testimony to Congress.
With the death toll now surpassing 1,000, transportation has been cut off and businesses shuttered, which can delay shipments of key parts to foreign manufacturers.
His testimony came as the World Health Organisation announced a name for the new coronavirus – Covid-19.
Dr Tedros Adhanom Ghebreyesus told a press conference a name was decided that "did not refer to a geographical location, an animal, an individual or group of people, and which is also pronounceable and related to the disease".
Stocks in New York were in the green at the London equities close, with the Dow Jones up 0.2%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.8%.
As risk appetite returned on Tuesday, safe haven assets slipped.
Against the yen, the dollar was trading at JPY109.87, up compared to JPY109.76 late Monday. Gold was quoted at USD1,564.39 an ounce at the London equities close Tuesday against USD1,574.80 at the close on Monday.
Elsewhere in forex, the pound was quoted at USD1.2944 at the London equities close Tuesday, firm compared to USD1.2922 at the close on Monday.
Sterling edged higher after official data showed that the UK economy ground to a halt in the final three months of 2019.
UK gross domestic product was flat in the three months to December quarter-on-quarter, following growth of 0.5% in the preceding quarter. This was in line with consensus, according to FXStreet.
Year-on-year, the economy expanded 1.1% in the final quarter of 2019, beating expectations for 0.8% growth.
The service sector grew just 0.1% in the fourth quarter from the third quarter, while production output fell 0.8%, driven by manufacturing. Construction output, though, grew 0.5%.
For December alone, gross domestic product grew 0.3% on a monthly basis, reversing a 0.3% decline seen in November and above consensus forecasts for a 0.2% rise. And for 2019 as a whole, UK GDP grew by 1.4%, picking up slightly from 1.3% in 2018 but remaining one of the slowest growth rates recorded since the financial crisis just over a decade ago.
"The fourth quarter remains one to forget, despite the above-consensus GDP print for December. At least the rebound in the domestic-orientated services sector in December was a little bigger than the consensus anticipated," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"The sharp reduction in domestic political uncertainty since the election, however, should enable the economy to regain momentum in Q1," said Tombs. "The hit from political uncertainty in Q4 is clearly visible among the expenditure components of GDP."
The euro stood at USD1.0917 at the European equities close Tuesday, flat against USD1.0920 at the same time on Monday.
Meanwhile, Brent oil was quoted at USD54.10 a barrel at the London equities close Tuesday from USD53.58 late Monday.
"WTI and Brent crude have rallied as traders are less fearful about the health crisis in China. It would appear the coronavirus crisis is spreading at a slower rate, so that has given traders some optimism. The energy market fell to a 13-month low recently so the slightly optimistic sounds coming out of China in relation to the health tragedy as prompted bargain hunters to enter the fold," said David Madden at CMC Markets.
The rise in the price of Brent helped BP shares climb 1.2% on Tuesday while Royal Dutch Shell 'A' shares ended up 0.9% and 'B' shares up 1.6%.
At the top of the FTSE 100 on Tuesday, though, was TUI, shares advancing 13%.
The travel operator said strong travel demand, particularly from the UK, will help it offset cost pressures from the grounding of the Boeing 737 MAX.
The aircraft was grounded by regulators last year following two fatal crashes.
TUI said it saw the "best booking volumes month in the company's history" during the three months to December - following the collapse of rival Thomas Cook in September last year.
The Anglo-German firm anticipates high single digit percentage growth in revenue for the current financial year, versus previous mid-to-high single digit percentage growth guidance, due to strong trading trends in its Markets & Airlines business.
Annual earnings before interest and tax is now expected to be between EUR850 million to EUR1.05 billion versus previous guidance of EUR950 million to EUR1.05 billion. The tweak to this guidance was attributed to Boeing's intention to return the 737 MAX to service by mid-2020 as compared with a previous estimate of April.
Other London-listed travel stocks were lifted by TUI's update, with British Airways parent International Consolidated Airlines closing up 4.2% and easyJet up 3.7%.
JD Sports Fashion rose 3.3% despite the UK Competition & Markets Authority saying its phase two investigation has provisionally found the retailer's purchase of Footasylum could damp competition.
"The CMA's current view is that blocking the deal by requiring JD Sports to sell the Footasylum business may be the only way of addressing these competition concerns," said Kip Meek, chair of the independent inquiry group leading the investigation.
More positively, JD Sports said earnings are expected "at least" equal to the top end of market expectations for the current financial year.
This comes after a "robust" post-Christmas sales period in key overseas markets, the athleisurewear retailer said.
Safely the worst blue-chip performer on Tuesday was NMC Health, sinking 15%.
Kohlberg Kravis Roberts confirmed that it does not intend to make an offer for NMC Health, a day after the UAE-focused private hospital operator confirmed it received "highly preliminary approaches" from two private equity firms.
NMC shares had gained 32% on Monday.
KKR, however, said it has not made a proposal nor discussed with NMC the terms of any possible offer. Meanwhile, GKSD Investment Holding confirmed it is considering a potential offer for NMC. GKSD is backed by sponsors of Italian hospital chain Gruppo San Donato.
Compared to this time a year ago, NMC shares have plummeted 70%.
In the FTSE 250, William Hill shares rose 7.0% after the bookmaker said it has signed a strategic partnership to be an exclusive sports book & wagering data provider of CBS Sports platforms in the US.
The partnership will kick-off with initial integrations in March on CBS Sports digital platforms, with a full rollout planned for the fantasy football season.
CBS Sports will utilise William Hill's odds, experts and more than 140 sports books to bolster its current digital offerings. In turn, William Hill will receive exclusive rights to promote its brand across CBS Sports' broad range of digital properties.
Elsewhere in London, intu Properties slumped 30% after Link Real Estate Investment Trust decided against taking part in an equity raise.
The company on Monday said Link Real Estate, which is listed in Hong Kong, was part negotiations to raise cash at the end of February, which would see it become a new shareholder in intu. intu also said talks with existing shareholders, including Peel Group, were "constructive".
However, intu said on Tuesday: "Link Real Estate has informed intu of its intention to no longer participate in a recapitalisation of the company. intu remains engaged with shareholders and potential new investors in relation to a proposed equity raise."
The company is currently looking to fix a struggling balance sheet and has made a number of disposals recently to reduce debt.
The UK corporate calendar for Wednesday has interim results from home furnishings retailer Dunelm, full-year results from online trading services provider Plus500, and a trading statement from defence firm Babcock International.
In Wednesday's economic calendar, there are German consume prices at 0700 GMT followed by the same data out the US at 1330 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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