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(Alliance News) - Stocks in London ended lower on Friday as investors took profit from a strong equity market rally, which saw the FTSE 100 end in the red for the first time in four sessions, as fears over the coronavirus returned.
In the latest development, a Chinese doctor who was punished after raising the alarm about the coronavirus died from the pathogen on Friday, sparking an outpouring of grief and anger over a deepening crisis which has now killed more than 630 people.
More than 31,000 people have now been infected by the virus that ophthalmologist Li Wenliang brought to light in late December. The doctor was punished for "rumour-mongering" by Wuhan police after he tried to warn colleagues people had a SARS-like virus.
The disease has since spread across China, prompting the government to lock down cities of tens of millions of people, and panic has spiralled around the globe as more than 240 cases have emerged in two dozen countries. A quarantined cruise ship in Japan now has 61 confirmed cases.
Meanwhile, in light of the coronavirus "hitting China's people and economy hard", S&P Global Ratings now estimates that China's economic growth will slow in 2020.
S&P forecasts GDP growth of 5.0% in 2020, compared with 5.7% before the outbreak, and now expects an above-trend 6.4% growth rate in 2021, compared with its previous forecast of 5.6%.
The FTSE 100 index closed down 38.09 points, or 0.5% at 7,466.40, but ended the week up 2.5%.
The FTSE 250 ended down 73.57 points, or 0.3% at 21,499.29, but ended the week up 1.7%, and the AIM All-Share closed down 2.06 points, or 0.2% at 961.94, but ended the week up 1.2%.
The Cboe UK 100 ended down 0.6% at 12,647.51, the Cboe UK 250 closed down 0.3% at 19,369.74, and the Cboe Small Companies ended up 0.1% at 12,486.43.
In Paris the CAC 40 ended down 0.1%, while the DAX 30 in Frankfurt ended down 0.5%.
"Having already rallied hard this week, it was going to be hard to push equities higher into the weekend, especially given the uncertainty surrounding the coronavirus in China. The disconnect between US and European equities and those assets in Asia likely to be harder hit by the virus continues to widen, but one suspects US equities cannot remain immune for ever," said IG Group's Chris Beauchamp.
"The spread of the virus is still a definite possibility, while some investors will be concerned that the speed and depth of the recent pullback was insufficient to 'reset' the market enough for a bigger move higher in the near-term," Beauchamp added.
Stocks in New York were lower at the London equities close retreating from record highs, despite the US jobs report showing stronger-than-expected jobs growth in January.
The DJIA was down 0.7%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.4%.
Employment in the US was significantly ahead of expectations in January, whilst hourly wages continued to edge higher, the US Bureau of Labor Statistics reported on Friday.
Total nonfarm payroll employment rose by 225,000 in January, with the unemployment rate at 3.6%. FXStreet said consensus had forecast 160,000 new jobs and a 3.5% unemployment rate.
The pace in January improved on the 147,000 jobs added in December. The average monthly gain in 2019 was 175,000.
On the US corporate front, Uber Technologies was up 8.9% in New York after the hail riding company late Thursday moved up the target date for becoming profitable to the fourth quarter of 2020, rather than in 2021.
US pharma giant AbbVie reported a swing to a profit in the fourth quarter of 2019 on sharply lower research & development costs and growth from its Humira and Imbruvica treatments in the US.
In the three months to December 31, AbbVie recorded net earnings of USD2.80 billion compared to a USD1.83 billion loss in the same period a year before.
Diluted earnings per share rose to USD1.88 from a USD1.23 loss per share.
Total costs & expenses fell sharply to USD4.78 billion from USD10.75 billion, as the pharma firm's R&D costs dropped to USD1.54 billion from USD6.50 billion. Net revenue in the fourth quarter rose 4.7% year on year to USD8.70 billion from USD8.31 billion.
The stock was up 5.2% on Wall Street.
On the London Stock Exchange, Vodafone closed up 1.3% after Jefferies upgraded the telecommunications firm to Buy from Hold.
At the other end of the large cap index, Hargreaves Lansdown closed down 6.1% at 1,604.50 pence after the stockbroker's co-founder Peter Hargreaves sold GBP550 million worth of stock, via an accelerated share bookbuild offering to institutional investors. He sold 34.4 million shares at a price of 1,600.00p per share.
Following the sale, Peter Hargreaves still holds an interest in about 24% of the company's issued share capital. The placing was extended from the original GBP500 million Hargreaves was hoping to raise due to "strong investor demand".
Burberry closed down 1.5% after the fashion house said the outbreak of coronavirus in China is having a negative effect on demand for its luxury goods. Burberry said 24 of its 64 stores on the Chinese mainland are closed, with the remaining stores experiencing a significant decline in customer visits.
Despite the spending patterns of Chinese customers across Europe not being affected, Burberry said it expects the situation to worsen due to widening travel restrictions. The company noted that the benefit of actions taken to mitigate the negative impact will be limited due to the proximity to the end of its financial year in March.
Analysts at the Share Centre said: "While Burberry was relatively unscathed from the period of protests and political unrest in Hong Kong, it's apparent there is no escaping the impact of the Coronavirus as parts of the country are virtually shut down. It was always going to be the case that a luxury goods company with so much exposure to the Far East would feel the impact and investors should appreciate Burberry's openness on the matter.
"While no financial impact assessment has been released by management, investors should brace themselves for a material hit to full year profits ending in March."
The pound was quoted at USD1.2907 at the London equities close, down from USD1.2933 at the London equities close Thursday, as the greenback strengthened.
Analysts at FXPro told Alliance News: "The pair returned to the lows since the beginning of December, showing a weakening throughout this week on strong US labour data.
"The reaction of the market was extremely mild, as other indicators that came out earlier in the week hinted to such outcome. It was not possible to completely surprise the markets. After publication, the stock markets tend to fix the rally observed earlier in the week, and the demand for the dollar is developing in the foreign exchange market due to less speculation around possible new easing of the Federal Reserve's policy."
The euro stood at USD1.0948 at the European equities close, down from USD1.0980 at the European equities close Thursday, after disappointing German data.
German industrial production was further ground down in December as the US-China trade conflict dragged on, official data showed Friday, while the country's prized trade surplus also ticked lower over 2019 as a whole.
Output at maker firms fell 3.5% month-on-month in December, statistics authority Destatis said in seasonally adjusted data, and was down 6.8% on the year.
Production was lower across all manufacturing sectors, with producer goods, consumer goods and capital good firms falling back.
Against the yen, the dollar was trading at JPY109.75, down from JPY109.96 late Thursday.
Brent oil was quoted at USD54.86 a barrel at the London equities close, down from USD55.14 at the London close Thursday.
Gold was quoted at USD1,567.40 an ounce at the close, firm against USD1,563.48 late Thursday.
"Commodity prices, and energy prices in particular, have been hard hit by the outbreak of coronavirus in China and the prospect of lower global commodities demand," said analyst Caroline Bain at Capital Economics research group.
The economic events calendar on Monday has China inflation data overnight and eurozone investor confidence at 0900 GMT.
The UK corporate calendar on Monday has a trading statement from UP Global Sourcing.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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