LONDON MARKET CLOSE: Asia Virus Spread, Higher Pound Send FTSE Lower

(Alliance News) - London markets ended lower on Tuesday, albeit having moved off the lows of the session, as news of the spread of a new strain of coronavirus in Asia rattled markets.

In addition, a stronger pound on the back of a solid UK jobs report for November dragged on the overseas earnings-heavy FTSE 100.

The FTSE 100 index of large-caps closed down 40.74 points, or 0.5%, at 7,610.70 on Tuesday, though having hit a low of 7,550.47 during the session.

The FTSE 250 ended down 101.63 points, or 0.5%, at 21,745.41, and the AIM All-Share closed down 1.30 points, or 0.1%, at 962.10.

The Cboe UK 100 ended down 0.5% at 12,891.08, while the Cboe UK 250 also closed down 0.5% at 19,609.69. The Cboe Small Companies ended down 0.5% at 12,392.71 as well.

In European equities on Tuesday, the CAC 40 in Paris ended down 0.5%, while the DAX 30 in Frankfurt ended 0.1% higher.

"US markets have followed their Asian and European counterparts lower today, after fears over a burgeoning health crisis in China raised question marks over the potential impact on global trade. Markets such as copper and the Chinese Yuan have taken it particularly hard, and the worry is that we could see this Coronavirus spread rapidly over a long weekend that is expected to see three-billion people travel to celebrate the Lunar New Year," said Joshua Mahony, senior market analyst at IG.

The coronavirus, which has spread to three other Asian countries and infected more than 200 people in China, has caused alarm because of its genetic similarities to Severe Acute Respiratory Syndrome, or SARS, which killed nearly 650 people across mainland China and Hong Kong in 2002-2003.

The virus has also reached Japan, Thailand and South Korea, with a total of four people having been hospitalised after visiting Wuhan.

Zhong Nanshan, a renowned scientist at China's national health commission, confirmed that the virus was being transmitted between humans, state media reported late Monday.

Stocks in New York were in the red at the London equities close, with the Dow Jones down 0.2%, the S&P 500 index down 0.1%, and the Nasdaq Composite flat.

US President Donald Trump used the stage in Davos at the World Economic Forum to tout the strong performance of the US economy, and to take credit for it.

"Years of economic stagnation have given way to a roaring geyser of economic opportunity," he said.

Deregulating the economy, cutting taxes, and striking new trade deals with China, Canada and Mexico had created economic opportunities for ordinary workers and their families, by bringing jobs back to the US.

Trump also said the US looked forward to negotiating a "tremendous" new deal with the UK.

The pound was quoted at USD1.3045 at the London equities close Tuesday, higher compared to USD1.2998 at the close on Monday.

"The pound received a lift on Tuesday, benefiting from a better than expected wage growth reading of 3.2%, including bonuses, against the 3.1% forecast. Combine this with Donald Trump talking up the potential for a 'tremendous' trade deal between the US and UK at the WEF in Davos and sterling was able to rise 0.4% and 0.3% against the dollar and euro respectively," said Connor Campbell at Spreadex.

The seasonally adjusted UK unemployment rate was stable at 3.8% in the three months to November, matching consensus, according to FXStreet.

The employment rate in the three months to November was estimated at a record high of 76.3%, the Office for National Statistics said, being 0.6 of a percentage point higher than a year earlier and 0.5 of a percentage point up on the previous quarter.

Growth in average earnings in the three months to November was unchanged at 3.2% for total pay, which includes bonuses. Regular pay growth, which strips out bonuses, slowed to 3.4% from 3.5%. FXStreet consensus had forecast total pay growth of 3.1% and regular pay growth of 3.4%.

The jobs report made some traders "call into question the chatter about a rate cut" from the Bank of England later this month, said David Madden at CMC Markets.

Elsewhere in forex, the euro stood at USD1.1096 at the European equities close Tuesday, against USD1.1083 at the same time on Monday. Against the yen, the dollar was trading at JPY109.95 compared to JPY110.15 late Monday.

In commodities, Brent oil was quoted at USD64.72 a barrel at the London equities close Tuesday from USD65.18 late Monday.

Gold was quoted at USD1,557.30 an ounce at the London equities close Tuesday against USD1,560.87 at the close on Monday.

In London, easyJet ended at the top of the FTSE 100, up 2.8% after posting a solid first quarter.

In the first quarter of financial 2020, ended December 31, easyJet said its total revenue grew 9.9% year-on-year to GBP1.43 billion, with passenger revenue rising 9.7% to GBP1.12 billion and ancillary revenue adding 11% to GBP301 million.

Passenger numbers in the first quarter increased by 2.8% to 22.2 million, with capacity increasing 1.0% to 24.3 million seats. Load factor was up 1.6 percentage points to 91.3%. Airline revenue per seat increased by 8.8%, exceeding management expectations.

Revenue per seat in the first half is guided to grow by mid to high single digits - versus previous guidance of low to mid single digits.

Meanwhile, fellow airline operator, International Consolidated Airlines, slumped 3.0%.

The British Airways owner finished lower - along with fellow European long-haul carriers, with Lufthansa down 3.4% in Frankfurt and Air France KLM down 2.3% in Paris - over worries there will be reduced customer demand for flights between Europe and Asia amid the coronavirus outbreak.

In the FTSE 250, Dixons Carphone ended up 5.9% as investors overlooked a blip in its Christmas trading update.

On Tuesday morning, Dixons posted 2% reported sales growth for the 10 weeks to January 4, with like-for-like growth flat. However, the electronics retailer in the afternoon corrected the reported figure, saying sales actually declined by 2%.

All other figures reported in the trading update were correct, the company said.

UK & Ireland Electricals revenue was 1% higher on a reported basis and up 2% like-for-like. However, Dixons posted an 11% drop in UKI Mobile revenue, with the like-for-like figure falling by 9%.

SSP rose 2.9% as it posted a "good" start to its financial year despite travel disruption.

London-based SSP operates food and beverage outlets in transport locations such as airports and train stations. Brands include baguette-maker Upper Crust and cafe chain Ritazza.

Revenue in the first quarter ended December rose 7.5% constant currency, with the figure rising by 6.1% at actual currency rates. Like-for-like sales growth at constant currency was 1.2%.

Like-for-like sales in continental Europe were hit by transport strikes across France during December, while the company also saw disruption in Hong Kong.

Card Factory ended 6.9% lower after UBS cut the greetings card retailer to Neutral from Buy.

In the corporate calendar on Wednesday, there are third quarter results from luxury retailer Burberry as well as pet supplies retailer Pets at Home, and first quarter results from stockbroker AJ Bell and accounting software firm Sage Group. Pub operator JD Wetherspoon and magazines and stationery retailer WH Smith release trading updates.

In Wednesday's economic calendar, there is UK public sector net borrowing at 0930 GMT and the US housing price index at 1400 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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