(Alliance News) - London stocks slumped at the open on Thursday, after the market's largest listing disappointed, while China reported its highest one-day total for coronavirus deaths, reigniting fears over the spread of the virus and its potential fallout.
Royal Dutch Shell's 2019 results fell slightly short of consensus earnings expectations.
The FTSE 100 index was down 66.68 points, or 0.9%, at 7,416.89 early Thursday. The mid-cap FTSE 250 index was down 106.08 points, or 0.5%, at 21,362.91. The AIM All-Share index was down 0.3% at 955.84.
The Cboe UK 100 index was down 1.0% at 12,569.18. The Cboe 250 was down 0.5% at 19,315.76, and the Cboe Small Companies up 0.1% at 12,491.91.
In mainland Europe, the CAC 40 in Paris was down 1.2% while the DAX 30 in Frankfurt was 1.1% lower early Thursday.
"Day 10 of more loose coronavirus headlines weighs on risk appetite. This time, it's 7,783 infection cases and 170 deaths which delivers uncertainty to the market. It's becoming harder and harder to compare 2003 SARs and 2019-nCoV, with the latter displaying a longer incubation period, higher transmission rate, but lower mortality rate," said Bethel Loh at ThinkMarkets.
"How big the demand and supply shock will be given the spread of coronavirus across the region remains to be seen," said Loh. "It really depends on when you think nCoV will peak. Some say the precipice of novel cases is likely to be at the end of next week, others suggest we'll be waiting till March."
Chinese authorities have taken extraordinary steps to arrest the virus's spread, including effectively locking down more than 50 million people in Wuhan and surrounding Hubei province. But that was yet to pay dividends, with the government reporting 38 new deaths in the 24 hours to Thursday, the highest one-day total. All but one were in Hubei.
In Asia on Thursday, stocks posted bruising losses amid the growing death toll, with the Japanese Nikkei 225 index ending down 1.7%.
Markets in China remain closed for the Lunar New Year holiday, but Hong Kong was open and the Hang Seng index closed down 2.7%.
The economic events calendar on Thursday has unemployment data from Germany and the eurozone at 0855 GMT and 1000 GMT respectively. In the afternoon, there are US GDP readings at 1330 GMT.
The main focus, though, is on the Bank of England's latest interest rate decision, due at midday. This will be followed by a press conference with Governor Mark Carney, his last at the central bank, at 1230 GMT.
Analysts are split over whether the BoE will cut rates or not on Thursday.
"Traders are implying a 46% probability of a rate cut, but we believe the true chances are slightly greater than this, and that the MPC will walk out tonight having voted either 5-4 or 6-3 in favour of a cut," said ThinkMarkets's Loh.
Sterling was quoted at USD1.2982 early Thursday as jitters mounted ahead of the BoE decision, lower compared to USD1.3003 at the London equities close on Wednesday.
Elsewhere in forex, the euro was priced at USD1.1015 early Thursday, firm compared to USD1.1000 late Wednesday. Against the yen, the dollar was quoted at JPY108.88 versus JPY109.07.
In commodities, gold was trading at USD1,581.47 an ounce early Thursday, higher than USD1,569.44 on Wednesday amid the risk-off environment.
Brent oil was quoted at USD59.74 a barrel early Thursday, soft compared to USD59.94 late Wednesday on renewed demand fears as the virus in China continued to spread.
In London, Royal Dutch Shell was among the worst performers in the FTSE 100 on Thursday, with 'A' shares down 4.3% and 'B' shares down 3.9%.
This was after the oil major just missed earnings expectations for 2019.
Shell's 2019 current cost of supplies earnings attributable to shareholders excluding items, its preferred profit metric, fell 23% to USD16.46 billion, short of market consensus of USD16.74 billion.
Peer BP, which reports its own annual earnings next week, was down 1.9% in a negative read-across
BT Group was at the bottom of the FTSE 100 index, down 4.5% after third-quarter performance missed expectations.
The telecommunications firm's revenue for the nine months to December fell 2% to GBP17.25 billion, with pretax profit down 8.6% at GBP1.91 billion. BT blamed the falling profitability on the lower revenue, higher spectrum fees, investment, and higher operating costs in Openreach, the firm's UK digital network business.
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."
At the top of the blue-chip index, meanwhile, was Unilever, up 1.0%.
Underlying sales growth for 2019 was 2.9%, just below its target range of 3% to 5%. The consumer goods giant in December had warned that this would be the case, given continued trouble in west African markets and a slowdown in south Asia, one of its biggest markets.
Revenue for 2019 amounted to EUR51.98 billion, up 2.0% from EUR50.98 billion the year before, while pretax profit dived by a third to EUR8.28 billion from EUR12.36 billion. This was as the company took a non-underlying charge of EUR1.24 billion versus a gain of EUR3.18 billion the year before.
Looking ahead, the Hellman's mayonnaise maker said underlying sales growth in 2020 will be in the "lower half" of its 3% to 5% range.
Diageo rose 1.6% despite saying full-year organic net sales growth is expected towards the lower end of its mid-term guidance range.
Sales rose to GBP10.83 billion in the six months to December 31 from GBP10.36 billion a year ago. Organic net sales grew 4.2%. Organic operating profit grew ahead of net sales, the company noted, up 4.6%.
Pretax profit slipped, however, to GBP2.46 billion from GBP2.63 billion. This was largely due to a non-repeating GBP146 million gain received in the year-ago period, which mainly related to the sale of a portfolio of 19 brands.
"These results reflect the changes we are making in the business to drive shifts in our culture. They are in line with our current mid-term guidance and have been delivered in the face of increased levels of volatility in India, Latin America and Caribbean and Travel Retail," said Chief Executive Ivan Menezes.
"For the full year, we therefore expect organic net sales growth to be towards the lower end of our 4 to 6% mid-term guidance range," he continued. "We continue to expect organic operating profit to grow roughly one percentage point ahead of organic net sales."
By Lucy Heming; lucyheming@alliancenews.com
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