LONDON MARKET CLOSE: Stocks Bounce Back Despite Lingering Virus Fears

(Alliance News) - London stocks finished Tuesday's session firmly in the green, with a slow morning giving way to stronger gains in the afternoon as US stocks jumped at the open despite the continued spread of a SARS-like virus in China.

The FTSE 100 index closed up 68.64 points, or 0.9%, at 7,480.69 on Tuesday. On Monday, the index had shed 2.3%.

The FTSE 250 ended up 129.39 points, or 0.6%, at 21,433.06 on Tuesday, and the AIM All-Share closed up 0.31 of a point, at 953.34.

The Cboe UK 100 ended up 1.0% at 12,680.37, the Cboe UK 250 closed up 0.6% at 19,377.67, and the Cboe Small Companies ended up 0.5% at 12,458.53.

In European equities on Tuesday, the CAC 40 in Paris ended up 1.1%, while the DAX 30 in Frankfurt rose 0.9%.

"At one point in danger of fading, Europe's rebound strengthened after the US open, buoyed by a solid jump from the Dow Jones," said Connor Campbell at Spreadex.

"It's not like there has been a wealth of good news regarding the Wuhan coronavirus outbreak – if anything, the opposite, with Germany confirming the first human-to-human transmission in Europe. However, the fact Hong Kong has slashed border travel with China, could be read as a step in the right direction in regards to containing the illness," he continued.

"Or, more likely, investors are just using yesterday's plunge as an opportunity to buy up shares on the (relative) cheap – the wisdom of which will no doubt be tested by coronavirus headlines over the coming days and weeks," said Campbell.

Hong Kong on Tuesday announced drastic measures to cut the number of people crossing into the city from mainland China in a bid to curb the spread of a SARS-like virus that has already killed more than 100 people.

The decision came as President Xi Jinping said China was in a struggle against a "demon" epidemic and the first cases of human-to-human contagion were detected abroad.

Over the past 24 hours, the number of cases has doubled to more than 4,500.

Stocks in New York were firmly in the green at the London equities close, with the Dow Jones up 0.7%, the S&P 500 index up 1.0%, and the Nasdaq Composite up 1.3%.

In the US, durable goods orders were better than expected in December.

New orders for manufactured durable goods in December increased 2.4% month-on-month, the Census Bureau said. This marked a substantial rebound from the 3.1% decline posted in November, and was ahead of FXStreet consensus of a 0.5% gain.

Meanwhile, US consumer confidence increased in January. The index rose to stand at 131.6 in January from 128.2 in December.

"The conference board measure of confidence is excellent, rising to 131.6 - close to all-time highs. This is understandable given record low unemployment, record high home and equity prices and the lowest national gasoline prices since last March," said ING.

However, ING noted that weak wage growth and global health worries may "limit the transmission" to spending.

Nonetheless, the dollar was stronger on Tuesday following the data.

The pound was quoted at USD1.2993 at the London equities close Tuesday, compared to USD1.3056 at the close on Monday.

The euro stood at USD1.1008 at the European equities close Tuesday, against USD1.1020 at the same time on Monday. Against the yen, the dollar was trading at JPY109.15 compared to JPY108.93 late Monday.

In commodities, Brent oil was quoted at USD59.92 a barrel at the London equities close Tuesday, up from USD58.90 late Monday.

"WTI as well as Brent crude are higher today after a losing streak. The wider fear factor in relation to the coronavirus has faded a little today, even though the situation is getting worse. In a bid to try and stabilise the energy market, OPEC said yesterday that it would consider extra supply cuts, and that helped spur on some buying today," said David Madden at CMC Markets.

Gold was quoted at USD1,569.90 an ounce at the London equities close Tuesday against USD1,582.00 at the close on Monday.

In London, Just Eat closed up 1.9% after saying it has agreed to become fast food giant McDonald's second delivery partner in the UK.

McDonald's is currently available for delivery in the UK and Ireland through ride-hailing firm Uber's food delivery business Uber Eats.

Turning to trading, Just Eat said 2019 ended in line with internal expectations.

The company expects to report underlying earnings before interest, tax, deprecation and amortisation of around GBP200 million. In 2018, underlying Ebitda came in at GBP173.9 million.

Just Eat also expects group orders of 254 million and revenue of about GBP1.0 billion. In 2018, group orders totalled 221.2 million, which generated GBP779.5 million in revenue.

Shares in Diageo closed down 1.4% after JPMorgan cut the distiller to Underweight from Neutral.

The top performer in the FTSE 250 was soft-drinks company AG Barr, finishing up 15% as it guided for full-year profit ahead of consensus.

The Irn-Bru maker said it adjusted its pricing and promotions in the year ended January 25 to align more closely with market conditions, which resulted in an increase in average realised prices.

For the 2020 financial year, AG Barr expects adjusted pretax profit to be be at the top end of current market expectations, just ahead of GBP37 million, but down from GBP45.2 million a year ago. Revenue is predicted to total GBP255 million versus GBP279 million a year ago.

Crest Nicholson rose 7.4% after the housebuilder maintained its dividend payment despite posting a 39% drop in profit for its 2019 financial year amid lower home completions.

For the year ended October 31, the company's pretax profit slumped to GBP102.7 million from GBP168.7 million in financial 2018, and revenue slipped 3% to GBP1.08 billion from GBP1.12 billion. Home completions fell 4% to 2,912 units from 3,048.

The company maintained its full-year dividend at 33.0p per share.

Crest said it remains confident in its ability to deliver on previous guidance and reiterated expectations for adjusted pretax profit in its current financial year in a range of GBP110 million to GBP120 million. Adjusted pretax profit in financial 2019 was GBP121.1 million.

Virgin Money UK advanced 4.3% after reporting that trading in the final three months of 2019 was in line with board expectations.

The lender - formerly known as CYBG - said it continued to perform well in the first quarter of its financial year, despite a "difficult market".

The FTSE 250-listed bank ended December 31 with a loan book of GBP72.9 billion, down slightly from GBP73.0 billion at the end of September. Virgin Money's Mortgage book slipped 0.8% in the three months to GBP59.6 billion from GBP60.1 billion.

Virgin Money said its net interest margin in the first quarter was stable at 1.60%, flat on the fourth quarter of financial 2019. The lender continues to expect its NIM in financial 2020 to be between 160 and 165 basis points.

In the UK corporate calendar on Wednesday there is fourth quarter production results from gold miner Fresnillo and third quarter results from airline Wizz Air.

In the economic calendar, the British Retail Consortium shop price index is at 0001 GMT and Japanese consumer confidence at 0500 GMT. UK Nationwide housing prices are at 0700 GMT while German consumer confidence is due at the same time.

At 1900 GMT is the US Federal Reserve's interest rate decision. This will be followed by a press conference with Chair Jerome Powell.

"There is no expectation in the market of any imminent change in Fed policy, with the consensus expecting Chair Powell to reiterate that the economy is in a 'good place'," said Rabobank.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.