(Alliance News) - London stock prices remained lower at midday on Thursday following further deaths in China from the spread of coronavirus, while the pound rose after the Bank of England held UK interest rates unchanged.
Members of the BoE's Monetary Policy Committee voted 7-2 to keep the Bank Rate unchanged at 0.75%. The market had priced in a slightly less than an even chance of a rate cut from the January meeting. In the event, only Jonathan Haskel and Michael Saunders voted for a rate cut, as both did in December.
The BoE cited reduced uncertainty in the UK following the recent general election, saying it expects economy to grow by 0.2% in the first quarter of 2020 as a result.
The pound was quoted at USD1.3071 at midday Thursday following the BoE's decision, up from to USD1.3003 at the close on Wednesday.
"The much needed interest rate cut never arrived, and Mark Carney proved that he is unreliable as the market was expecting a rate. The BOE’s decision spurred bullish bets for sterling which has been under tremendous pressure for the past few days," commented Naeem Aslam, chief market analyst at AvaTrade
The FTSE 100 index was down 87.58 points, or 1.2%, at 7,395.99. The FTSE 250 down 92.06 points, or 0.4%, at 21,376.93, and the AIM All-Share was down 0.5% at 953.26.
The Cboe UK 100 was down 1.2% at 12,540.85, the Cboe UK 250 was down 0.5% at 19,319.30, and the Cboe Small Companies flat at 12,487.03.
In European equities on Thursday, the CAC 40 in Paris was down 1.3%, while the DAX 30 in Frankfurt was 1.0% lower.
"A slightly more dovish Fed, and the corresponding perceived increase in the odds of further stimulus by the US central bank, failed to excite investors much as the coronavirus continues to dampen the mood on global markets," said Rabobank.
The Chinese government reported 38 new deaths in the 24 hours to Thursday, the highest one-day total. All but one were in Hubei.
The number of confirmed new cases also grew steadily to 7,711, the National Health Commission said. Another 81,000 people were under observation for possible infection.
"Experience with virus outbreaks in the past shows that markets often bounce back quickly, but even if the virus outbreak turns out be comparable to SARS, its global economic effects are likely to be larger, as China has a much bigger share in the global economy nowadays," said Rabobank.
Amid the renewed virus fears, Wall Street was pointed towards a lower open on Thursday. The Dow Jones and S&P 500 were both called down 0.6%, while the Nasdaq Composite was seen 0.5% lower.
The New York market was set for a downbeat session despite shares in Nasdaq listing Tesla surging 10% in pre-market trade.
Revenue in the electric car maker's fourth quarter was up just 2% on a year ago, but at USD7.38 billion was still above expectations of USD7.02 billion. The earnings report was the latest in a spate of good news for the firm founded by controversial entrepreneur Elon Musk after Tesla said earlier this month that it delivered 112,000 vehicles in the fourth quarter, a jump of nearly 23% compared to the same period in 2018.
Meanwhile, shares in social network Facebook were down 7.3% in the Nasdaq pre-market.
Facebook late Wednesday reported quarterly earnings and user growth stronger than most forecasts, but its shares have taken a hit. Facebook said net income rose 7% from a year ago to USD7.3 billion, while revenue increased 25% to USD21 billion in the final three months of last year. The number of people using Facebook monthly climbed 8% to 2.5 billion; for all its apps including Instagram, Messenger and WhatsApp, the figure was 2.89 billion.
In London, investors were similarly unimpressed with UK blue-chip earnings reports out on Thursday.
BT, down 5.7%, said third quarter profit was below expectations. The telecom and pay-television provider's revenue for the nine months to December fell 2% to GBP17.25 billion, with pretax profit down 8.6% at GBP1.91 billion.
Adjusted earnings before interest, tax, depreciation, and amortisation was 3% lower at GBP5.90 billion, while normalised free cash flow fell 42% to GBP1.00 billion in part due to a deposit for the rights to European football.
Chief Executive Philip Jansen commented: "BT delivered results slightly below our expectations for the third quarter of the year, but we remain on track to meet our outlook for the full year."
Royal Dutch Shell shares slipped as the oil major came up short of earnings consensus.
Shell's 2019 current cost of supplies earnings attributable to shareholders excluding items, its preferred profit metric, fell 23% to USD16.46 billion, below market consensus of USD16.74 billion.
Shell 'A' shares were down 3.0% and 'B' shares down 2.4%. Peer BP, which reports its own annual earnings next week, was down 1.5% in a negative read-across.
Distiller Diageo was 2.7% lower after tweaking its full-year organic sales growth guidance.
For the six months to December 31, Diageo recorded pretax profit of GBP2.46 billion, down 6.2% from GBP2.63 billion a year ago. This was despite sales rising to GBP10.83 billion from GBP10.36 billion a year ago.
Net sales grew 4.2% to GBP7.2 billion, also up 4.2% on an organic basis. Organic operating profit grew ahead of net sales, the company noted, up 4.6%.
However, the Diageo warned that full-year organic net sales growth will be towards the lower end of its mid-term guidance range of 4% to 6% due to changes it is making in the business following increased levels of volatility.
Unilever saw a better reception to its results, the consumer goods firm's shares up 1.7%.
In the year ended December 31, revenue was 2.0% higher at EUR51.98 billion from EUR50.98 billion, though pretax profit was 33% lower year-on-year at EUR8.29 billion from EUR12.36 billion.
Unilever, which owns names such as Dove soap and Ben & Jerry's ice cream, said underlying sales climbed 2.9% year-on-year in 2019, with growth below its guided 3% to 5% range, as expected, following a fourth quarter "slowdown".
In addition, the company said it has "initiated a strategic review" of its tea business.
St James's Place was up 2.3% after reporting a "robust" set of results, with a 22% annual rise in funds under management, as a positive investment return compensated for slightly lower net inflows. The wealth manager also said that UK investor sentiment has improved following the December general election.
In the FTSE 250, Avast sank 11%. The cyber security firm said it has ended the provision of data to Jumpshot after allegations the subsidiary harvests and sells personal data.
Prague-headquartered Avast currently has a 65% stake in data analytics business Jumpshot.
London-listed business events firm Ascential owns the rest, buying the 35% stake in July last year for USD61 million. However, in its own statement on Thursday, Ascential said it has agreed to sell that 35% stake back to Avast. It did not say for how much, but said Avast will pay the original investment in cash plus expenses.
To come in the economic calendar on Thursday is US gross domestic product, due at 1330 GMT.
US GDP is expected to grow 2.1% annually in the fourth quarter, matching the rate confirmed for the three months to September.
The dollar was slightly lower ahead of the data.
The euro stood at USD1.1019 at midday Thursday, up against USD1.1000 late Wednesday. Against the yen, the dollar was trading at JPY108.85, down from JPY109.07 late Wednesday.
In commodities, Brent oil was quoted at USD58.29 a barrel midday Thursday from USD59.94 late Wednesday.
Gold was quoted at USD1,580.66 an ounce against USD1,569.44 at the close on Wednesday, the safe haven asset rising amid the renewed risk-off mood.
By Lucy Heming; lucyheming@alliancenews.com
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