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(Alliance News) - The FTSE 100 continued to fall on Wednesday as the number of countries reporting coronavirus cases racked up.
London-listed travel stocks remained hard hit as countries across Europe reported infections, while Taylor Wimpey was the biggest blue-chip faller after reporting its annual results.
The FTSE 100 was down 35.49 points, or 0.5%, at 6,982.39 early Wednesday. The index of large-caps is now down around 5.7% since the week began.
The mid-cap FTSE 250 index was down 193.79 points, or 0.9%, at 20,522.18 in early trade, and the AIM All-Share index was down 1.2% at 918.92.
The Cboe UK 100 index was down 0.6% at 11,821.81. The Cboe 250 was down 0.8% at 18,541.54, and the Cboe Small Companies down 0.2% at 12,264.74.
In mainland Europe, the CAC 40 in Paris was down 0.5% while the DAX 30 in Frankfurt was down 0.8% early Wednesday.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite ended down 0.8%, while the Hang Seng index in Hong Kong finished 0.7% lower.
"Coronavirus may have been headline news for most of us for the last month but it's taken until this week to truly infect the markets, as investors flee risk amid a growing belief that we have a full blown pandemic on our hands," said Craig Erlam at Oanda.
"Cases are popping up right, left and centre outside of China, with the infection and fatality rate in Iran causing particular concerns for the middle east," said Erlam. "Italy and South Korea are the other two countries that have been highlighted as being problematic but other countries are far from immune and Tuesday seemed to bring updates of new cases almost on the hour, every hour."
South Korea reported 169 new infections on Wednesday, raising its total tally to 1,146 – by far the largest outside China – while an 11th person died.
In Iran, which has reported 15 deaths out of nearly 100 infections, even the country's deputy health minister Iraj Harirchi said he had contracted the virus.
Meanwhile Italy – which has reported 10 deaths and more than 300 cases – has locked down 11 towns and ordered Serie A football games to be played to empty stadiums.
The virus has killed 2,715 people and infected over 78,000 in China. There were 52 more deaths reported on Wednesday – the lowest in three weeks – with no fatalities outside the epicentre in central Hubei province.
The disease has now reached dozens of countries, however, with Austria, Croatia and Switzerland the latest to declare cases.
London-listed travel stocks continued to fall, battered by worries over demand as the coronavirus outbreak continued to spread.
TUI was down 3.6%, while airline easyJet sank 2.8%. The two are down 17% and 22% respectively since the week began. A hotel in Tenerife that has been quarantined after guest was found to have coronavirus is used by TUI.
Taylor Wimpey was the biggest blue-chip faller, down 4.0% despite posting a rise in profit for 2019.
Revenue in 2019 came in 6.4% higher at GBP4.34 billion from GBP4.08 billion, with the FTSE 100 firm's pretax profit rising 3.1% to GBP835.9 million from GBP810.7 million.
Before exceptional items however, pretax profit dipped 4.1% to GBP821.6 million from GBP856.8 million. Market consensus, compiled by Taylor Wimpey, had seen pretax profit before exceptional items at GBP821.5 million.
For 2019, the firm reported completions of 16,024, up 5.0% from 15,275 the year before.
Taylor Wimpey added: "However, in an environment where the political and economic outlook has been uncertain, average sales prices remained flat, while build cost inflation increased."
Diageo was down 1.0% in early trade as it anticipated a hit to profit amid the closure of bars and restaurants in the Asia Pacific region as countries attempt to contain the coronavirus outbreak.
Diageo said it expects a hit to organic net sales of around GBP225 million to GBP325 million in the current financial year, while organic operating profit is expected to be knocked by between GBP140 million to GBP200 million.
The brewer and distiller noted that bars and restaurants in China have largely been closed while there has been a "substantial reduction" in banqueting. In other Asian countries, particularly South Korea, Japan and Thailand, events have been cancelled and tourism has dropped.
"The COVID-19 situation is dynamic and continues to evolve and these ranges exclude any impact of the COVID-19 situation on other markets beyond those mentioned above. We will continue to monitor the situation closely," said Diageo.
SSP, which also warned on a hit from coronavirus, was down 5.2%.
In China, SSP said it has seen "sharp declines" in both domestic and international air passenger numbers, which are running around 90% lower year-on-year, with numbers also lower across other Asia Pacific countries such as Singapore, Thailand and the Philippines.
Accordingly, SSP expects February sales across the Asia Pacific region - which accounts for approximately 8% of group revenue - will halve on a year ago. Together with the impact in the Middle East and India, this is expected to reduce group revenue in February by around GBP10 million to GBP12 million. This will result in a knock-on hit to operating profit of around GBP4 million to GBP5 million.
Restaurant Group was down 3.0% as it swung to a loss for 2019 and suspended its dividend.
Revenue for 2019 surged to GBP1.07 billion from just GBP686.0 million the year before, due to the addition of noodle chain Wagamama, whose acquisition was completed at the end of 2018. However, the company swung to a pretax loss of GBP37.3 million from a profit of GBP13.9 million. Profit was hit as Restaurant Group took GBP111.8 million in exceptional items, versus just GBP38.8 million a year ago.
Of 2019's impairment, GBP103.1 million related to restaurants trading within its Leisure operating segment.
Looking ahead, Restaurant Group said its focus is on growing the Wagamama, Concessions and Pubs businesses while rationalising its Leisure operations and accelerating its deleveraging profile.
"In order to support these strategic priorities, the board has taken the decision to temporarily suspend the dividend. This will allow us to continue investing in our three high growth businesses, whilst facilitating an acceleration of our Leisure estate rationalisation and reducing our net debt," said Chief Executive Andy Hornby.
Restaurant Group is therefore not recommending a final dividend payment and the total payout for the year is 2.1p.
Hornby added that the firm has made an "encouraging" start to 2020 with like-for-like sales up 5.3% in the first six weeks. For 2019, like-for-like sales were up 2.7%.
Serco rose 2.4% after saying it will pay a dividend for the first time since 2014 as it reported growth in both revenue and profit.
Revenue for 2019 grew 15% to GBP3.25 billion, with pretax profit up 8.9% to GBP80.7 million versus GBP74.1 million in 2018.
The company re-instated its dividend, paying out 1.0 pence.
"When dividend payments were suspended in 2014, the board committed to resuming dividend payments to Serco's shareholders as soon as it judged it prudent to do so. 2019 has been a year of very strong operational and financial performance. It is also the last year of significant outflows of cash related to [onerous contract provisions] and restructuring exceptional costs. Our expectations for 2020 are for further good progress in increasing underlying earnings and reducing financial leverage," Serco explained.
In forex, sterling was quoted at USD1.2984 early Wednesday, lower than USD1.3009 at the London equities close on Tuesday.
The euro traded at USD1.0879 early Wednesday, soft compared to USD1.0879 late Tuesday. Against the yen, the dollar was quoted at JPY110.39, firm versus JPY110.12.
Gold was quoted at USD1,647.80 an ounce early Wednesday, firm versus USD1,646.81 on Tuesday. Brent oil was trading at USD54.46 a barrel early Wednesday, lower than USD55.50 late Tuesday.
By Lucy Heming; lucyheming@alliancenews.com
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