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(Alliance News) - London stocks opened higher on Friday as Chinese virus worries eased, while the small-cap index was boosted by a set of positive corporate news.
"If the experts think the coronavirus can be contained, then we are looking for the next near-term driver for stock markets," said London Capital Group analyst Jasper Lawler. "The PMIs are the most recent test of the global recovery that has been baked into this stock market rally."
The economic events calendar on Friday has purchasing managers' index readings from the eurozone, UK and US at 0900 GMT, 0930 GMT and 1445 GMT, respectively.
Out already, Germany's latest round of purchasing managers' index readings have signalled a positive start to 2020, IHS Markit said. The flash composite PMI rose to a five-month high of 51.1 in January from 50.2 in December, moving further above the no-change mark of 50.
This was helped an improvement in the country's manufacturing PMI reading, which hit an eleven-month high of 45.2 in January from 43.7 in December. With a score below 50, though, Germany's manufacturing sector continues to shrink. The services PMI rose to 54.2 from 52.9, a five-month high.
Meanwhile, the World Economic Forum in Davos, Switzerland, concludes on Friday.
The FTSE 100 index was up 90.75 points, or 1.2%, at 7,598.42 early Friday. The mid-cap FTSE 250 index was up 157.13 points, or 0.7%, at 21,697.69. The AIM All-Share index was up 0.3% at 966.16.
The Cboe UK 100 index was up 1.3% at 12,880.51. The Cboe 250 was up 0.7% at 19,578.82, and the Cboe Small Companies up 0.1% at 12,469.36.
In mainland Europe, the CAC 40 in Paris was up 1.0% while the DAX 30 in Frankfurt was 1.1% higher early Friday.
Brussels' two top officials, the presidents of the European Commission and the European Council, signed off on Britain's EU divorce agreement Friday.
With Ursula von der Leyen and Charles Michel's formal endorsement, the text will now go to the European Parliament on Wednesday next week for ratification.
On Thursday, diplomats from the EU member states will approve the deal in writing. Then on Friday, Britain will spend its last day in the EU before leaving the bloc at 2300 GMT as clocks strike midnight in Brussels.
Queen Elizabeth II gave her formal assent to the British withdrawal legislation on Thursday, and the EU is now expected to complete the final formalities in the coming days.
Sterling was quoted at USD1.3135 early Friday, up from USD1.3107 at the London equities close on Thursday. The euro was trading at USD1.1049 early Friday, firm versus USD1.1036 late Thursday.
Just Eat shares slipped 3.0% in early trade on Friday amid a delayed merger with Takeaway.com, as the UK competition watchdog looks into the deal.
Late on Thursday, the Dutch takeaway platform said the Competition & Markets Authority was reconsidering its position on the merger.
The CMA on Friday confirmed it will be looking into whether the combination would lessen competition in the UK takeaway platform sector. The invitation for comment closes on February 6.
The two had originally envisaged trading beginning in London as a new company on Monday next week, and the name was to be changed to Just Eat Takeaway.com NV on Friday this week.
However, due to the CMA move, the timetable has been delayed by a week, and the new company will be renamed on January 31 and start trading February 3.
Among London mid-caps, Rathbone Brothers jumped by 2.0% after RBC raised the wealth manager to Outperform from Sector Perform.
Marston's was on the other side of the index, down 5.2%. The brewer and pub and hotel operator warned that its second-half costs are expected to be higher by a further GBP2 million to GBP3 million amid a higher-than-anticipated increase in the UK national minimum wage: 6.2% from April.
Elsewhere, Marston's said it delivered a "creditable" performance in the 16 week period to January 18 despite a "challenging" market.
Managed and franchise like-for-like sales growth at its pubs increased 1.0% during the period, Marston's said, driven by drinks sales. Food sales, meanwhile, were weak, the company noted.
Trading of pubs over the Christmas fortnight was strong, with like-for-like sales growth of 4.5%. Turning to Marston's beer operations, the company said volumes during the period were slightly behind last year, reflecting weaker lager sales. Excluding lager, volumes were in line with last year.
"Our balanced pub portfolio enables us to perform well in the context of current market dynamics and our market-leading Beer Company has continued to increase market share in both the on and the off trade in the period," said Marston's Chief Executive Ralph Findlay.
Turning to the AIM market, Norman Broadbent surged by 14% on Friday as it returned to profit after several years of losses.
The recruitment company reported a 22% increase in revenue for 2019 to GBP11.5 million. Net fee income grew by 15% year-on-year to GBP7.6 million.
This has helped the company to return to profit in 2019, it said without specifying, after reporting a pretax loss of GBP700,000 in 2018.
"The continued growth in revenue and our return to full-year profitability after several years of losses is an extremely important milestone for Norman Broadbent," said Chief Executive Mike Brennan.
RTC Group was up 5.0% after saying that it traded in line with market expectations during 2019.
"The performance of the group and improvement in the net debt position is extremely pleasing and encouraging, especially in light of the uncertainty surrounding the UK economy. I remain cautiously confident in our ability to deliver continued growth across all areas of our business," said RTC Chair Bill Douie.
Getech Group shares sunk by 22% in morning trade as its annual results are set to come in below market forecasts. The mapping services provider said its performance was hurt by volatile macroeconomic and commercial backdrop for oil and gas exploration spending.
Getech was in talks on "several substantial" transactions in 2019, which had the potential to deliver "material" revenue growth, but did not complete during the year. The company said it expects it to result in a GBP2 million year-on-year fall in revenue.
In 2018, Getech generated revenue of GBP8.0 million.
"Getech began December 2019 financially ahead year-on-year and with a high-value sales pipeline that was commercially well-advanced. The shortfall in 2019 revenue is therefore disappointing," said Chief Executive Jonathan Copus.
In Asia on Friday, the Nikkei 225 index in Tokyo closed up 0.1%. The Shanghai market was closed ahead of the Lunar New Year holiday. Hong Kong remained open but closed early, with the Hang Seng index ending up 0.2%.
The World Health Organisation has said it is "too early" to declare an international public health emergency over the coronavirus outbreak as six people are tested for the illness in the UK.
While none of the UK cases has been confirmed as the virus so far, two of those being tested in Scotland had been diagnosed with influenza after travelling to Wuhan, China.
In the meantime, China on Friday confirmed a second death outside the epicentre of a SARS-like virus outbreak, raising the overall toll to 26 dead.
China also added four more cities to a transport ban around the epicentre of a deadly virus, bringing the number affected by the shutdown to over 41 million as authorities scramble to control the disease.
Authorities in Xianning, Xiaogan, Enshi and Zhijiang cities – all located in Hubei province where the virus first emerged – said public transport services including train stations would be closed.
Some cities also announced the closure of entertainment venues including theatres and karaoke bars.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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