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(Alliance News) - The FTSE 100 was lacking direction on Thursday at midday, dipping in and out of the red as caution persisted over the coronavirus outbreak.
There were a number of blue-chip risers on Thursday following the release of their annual results, including Smith & Nephew, Lloyds Banking and BAE Systems. Tugging at the other end of the London stock index were ex-dividend stocks Imperial Brands and GlaxoSmithKline, as well as AVEVA after its latest update.
The FTSE 100 was up 5.33 points, or 0.1%, at 7,462.35 on Thursday. The mid-cap FTSE 250 index was up 59.51 points, or 0.3%, at 21,910.37. The AIM All-Share index was up 0.3% at 976.22.
The Cboe UK 100 index was up 0.1% at 12,638.80. The Cboe 250 was up 0.4% at 19,757.21, and the Cboe Small Companies down 0.1% at 12,473.60.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were down 0.2% and 0.1% respectively in early afternoon trade.
"This lack of direction underlines the state of uncertainty investors find themselves in as they digest the mixed economic developments from around the world. Investors aren't very reassured by the slower death toll trend of the coronavirus in mainland China as new victims in other countries like Japan and South Korea spark fresh worries about the spread of the virus," said Pierre Veyret at ActivTrades.
The death toll in China hit 2,118 as 114 more people died, but health officials reported the lowest number of new cases there in nearly a month, including in the hardest-hit province, Hubei. More than 600 new infections were reported in Wuhan – the lowest daily tally since late January, and well down from the 1,749 new cases the day before.
Chinese authorities placed Wuhan, a city of 11 million people, under quarantine on January 23 and quickly locked down the rest of Hubei in the days that followed.
More worryingly, though, a man and a woman in their 80s who had been aboard the Diamond Princess have died, local media reported, citing a government source. The huge vessel moored in Yokohama is easily the biggest coronavirus cluster outside the Chinese epicentre, with 621 positive cases confirmed among the passengers and crew – one sixth of the total.
Wall Street is also on course for a soft start on Thursday, with the Dow Jones, S&P 500 and Nasdaq all pointed down 0.2%.
To come in the economic events calendar on Thursday at 1230 GMT are minutes from the European Central Bank's January meeting.
Released this morning, data showed UK retail sales grew ahead of market expectations in January.
Retail sales were up 0.9% in January month-on-month, recovering after falls in the previous two months. January's rebound was largely due to moderate growth in both food and non-food stores, the ONS said.
Food sales increased 1.7% month-on-month, while leading the charge among the non-food category were clothing and footwear stores, up 3.9%. Department stores recorded a 1.6% rise while household goods stores saw sales fell 1.1%.
Year-on-year, the volume of retail sales in the UK were up 0.8%. FXStreet consensus had pencilled in a rise of 0.7% on both a monthly and annual basis.
Despite the upbeat data, sterling was quoted at USD1.2888 Thursday midday, down from USD1.2947 at the London equities close on Wednesday.
Elsewhere, the euro traded at USD1.0791 on Thursday, flat on USD1.0793 late Wednesday. Against the yen, the dollar was quoted at JPY112.12, up from JPY110.93.
In commodities, Brent oil was trading at USD59.04 a barrel on Thursday, up from USD58.88 late Wednesday. Gold was quoted at USD1,6011.93 an ounce, higher than USD1,605.82 on Wednesday.
In London, Smith & Nephew was the top performer in the FTSE 100, up 7.5% after the medical technology firm reported its best underlying revenue growth "for several years".
Revenue for 2019 amounted to USD5.14 billion, up 4.8% on the year before. Underlying revenue growth was 4.4%, a significant improvement on the 2% recorded for 2018.
"The improved underlying revenue growth of 4.4% in 2019, the best for several years, has propelled group sales above USD5 billion for the first time in Smith & Nephew's history. All franchises and regions meaningfully contributed to this record," said Chief Executive Roland Diggelmann.
Pretax profit was slightly lower at USD743 million versus USD781 million the year before, hampered as selling, general & administrative expenses rose to USD2.69 billion from USD2.50 billion.
Looking forward, Smith & Nephew said it expects underlying revenue growth to be in the range of 3.5% to 4.5% in 2020. In addition, the company said it expects to deliver a 2020 trading profit margin at or slightly above 2019 level of 22.8%. In 2018, trading margin was 22.9%.
Lloyds Banking rose 3.6% as the UK lender reported a fall in profit for 2019 but retained its capital build guidance.
In 2019, Lloyds recorded pretax profit of GBP4.39 billion, which was down 26% on 2018's GBP5.96 billion and 1.8% below the GBP4.47 billion consensus of market forecasts compiled by the company. Statutory net interest income for 2019 amounted to GBP10.18 billion, down 24% from GBP13.40 billion the year before.
Looking to 2020, Lloyds is guiding for a net interest margin between 2.75% and 2.80%. The lender said its operating costs will fall below GBP7.7 billion, and expects its cost-to-income ratio to beat the 2019 figure. Lloyds also said its capital build will be within its ongoing range of 170 to 200 basis points per year, with risk-weighted assets to be broadly in line with 2019.
BAE Systems was up 2.6% after the defence firm reported a rise in sales and revenue and said 2019 had been "a year of significant progress for the company".
The Farnborough-based company said revenue was GBP18.3 billion, up 8.9% from GBP16.8 million in 2018. Bloomberg consensus, provided by BAE, expected GBP19.8 billion in revenue. Pretax profit was 33% higher at GBP1.6 billion compared to GBP1.2 billion.
At the bottom of the FTSE 100 was Imperial Brands, down 6.0% as the tobacco stock went ex-dividend, meaning new buyers no longer qualify for the latest payout. GlaxoSmithKline, down 1.6%, also was ex-dividend.
AVEVA shares dipped 3.8% after the engineering and industrial software company warned coronavirus is hurting its operations in China.
AVEVA said it has achieved high single-digit organic constant currency revenue growth in the ten months to the end of January. AVEVA explained that growth was supported by "strong orders" in Rental & Subscription, partly offset by "significantly" lower Initial & Perpetual licences.
On a regional basis, the Cambridge-headquartered company said it has achieved growth across all of its reporting segments, with particularly "good" growth in Asia Pacific.
AVEVA said the ongoing disruption in China - caused by the coronavirus - is hurting its sales in that country due to travel restrictions and office closures. China has historically accounted for around 5% of AVEVA's overall revenue.
At the top of the FTSE 250 was Moneysupermarket.com, shares advancing 12%.
The price comparison website reported profit growth and boosted its dividend in what was a "standout" year for its MoneySavingExpert website.
In 2019, revenue was 9.2% higher at GBP388.4 million from GBP355.6 million, with pretax profit rising 8.5% to GBP116.0 million from GBP106.9 million. Moneysupermarket edged its full-year payout 6.0% higher to 11.71 pence per share from 11.05p.
By Lucy Heming; lucyheming@alliancenews.com
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