LONDON MARKET CLOSE: Stocks End Week In Retreat Amid Virus Fears

(Alliance News) - Stocks in London ended the week firmly lower on Friday as the coronavirus in China continues to depress sentiment amongst investors.

The FTSE 100 index closed down 95.95 points, or 1.3%, at 7,286.01. The flagship index is down 4% so far this week.

The FTSE 250 ended down 0.7% at 21,143.49 and the AIM All-Share finished flat at 950.99.

The Cboe UK 100 closed 1.3% lower at 12,339.20, the Cboe UK 250 ended down 0.5% at 19,148.48, and the Cboe Small Companies down 0.1% at 12,433.98.

In Paris, the CAC 40 closed down 1.1% and the DAX 30 in Frankfurt both 1.3% lower.

"The week is ending on a distinctly downbeat note, with heavy losses for indices on both sides of the Atlantic," said Chris Beauchamp at IG.

"From the look of price action so far in the US session, there is no real desire to hold on to positions into the weekend. Indices on Wall Street are headed back to the lows of the week, having entirely unwound last night's late-day rally, a situation worrying similar to Tuesday and Wednesday.

"It would appear investors are still not keen on buying this dip, especially if the situation in China is likely to worsen. One thing is fairly obvious - few would have suggested 'major virus outbreak' as a big risk for markets in 2020. This underlines a key point about investing – it is rarely the obvious things, like trade wars or impeachment that cause rapid losses," Beauchamp continued.

"These can be navigated relatively safely, but events like the coronavirus take time to process. It is unlikely to be a major top, but it has sparked off a pullback that could run for a while yet, particularly if nervousness and unease is reflected in economic reports and earnings outlooks."

Two members of the same family have tested positive for coronavirus in England.

The first cases of the virus to be diagnosed in the UK were announced as more than 80 Britons on an evacuation flight from the Chinese city at the centre of the outbreak were due to land in the UK.

The Department of Health declined to say where in England the patients are from but it is understood they are not in the Wirral area, where a special facility has been set up to quarantine those returning from Wuhan.

They are being treated at a hospital in Newcastle, sources told the PA news agency.

On Wednesday night, an apartment-hotel in Yorkshire was put on lockdown when a man, understood to be a Chinese national, was taken to hospital after falling ill.

Stocks in New York were lower on Friday at the London close. The DJIA was down 1.4%, the S&P 500 index 1.3% lower, and the Nasdaq Composite down 1.1%.

ExxonMobil's quarterly earnings were hit by slowdowns in the Downstream and Chemical segments, the oil giant reported.

GAAP earnings for the last quarter of 2019 fell 31% on the year prior to USD5.69 billion and the per share figure was 6% lower at USD1.33.

Texas-based Exxon's revenue for the fourth quarter declined by 6.6% on the year before to USD67.17 billion. This was despite oil equivalent remaining flat at just over 4 million barrels per day.

For the entirety of 2019, Exxon's earnings fell 31% to USD14.34 billion, with the per share amount down the same to USD3.36. Annual revenue dipped 8.8% to USD264.94 billion.

Impairments caused Exxon's peer Chevron to post a quarterly loss. Chevron posted a USD6.61 billion loss for the last quarter of 2019, after a USD3.73 billion profit in the same period a year prior.

This is due to previously announced impairments and write-offs worth USD10.4 billion, related to assets in Appalachian shale as well as the Kitimat liquefied natural gas project and the Big Foot field in the Gulf of Mexico.

Revenue for the last quarter was USD34.57 billion, 14% lower than the year before, with output flat.

For 2019, earnings declined significantly, to USD2.92 billion from USD14.82 billion in 2018. Chevron's 2019 revenue declined 12% on the year before to USD139.87 billion, though production was up 6%.

Exxon was down 3.5% in New York, with Chevron 2.6% lower.

Against the yen, the dollar was trading at JPY108.40, soft against JPY108.75 late Thursday.

UK Prime Minister Boris Johnson will hail the "dawn of a new era" as the UK leaves the EU following a tumultuous period since the 2016 EU referendum, which saw heightened economic uncertainty and claimed the premiership of Johnson's predecessor Theresa May.

At 2300 GMT on Friday, bonds dating back to 1973 when the UK joined the European Economic Community will be broken, but Johnson insisted Brexit marks "not an end but a beginning". The UK will immediately enter a transition period scheduled to end on December 31.

However, the UK faces further uncertainty as both sides seek to strike a trade deal by the end of the year.

The pound was quoted at USD1.3186, firm against USD1.3102 Thursday.

On the London Stock Exchange, Polymetal closed up 1.5% after the gold miner approved a special dividend of USD0.20 per share.

"Significant free cash flow generated by Polymetal in 2019 underpins the payment of a special dividend while ensuring that our leverage ratio remains at our target 1.5 times net debt to earnings before interest, tax, depreciation, and amortisation level. This decision supports our commitment to deliver meaningful and sustainable cash returns to our shareholders," said Chief Executive Vitaly Nesis.

Peer Fresnillo, up until December a FTSE 100 member, ended 1.9% higher.

Gold was quoted at USD1,586.60 an ounce at the London, higher than USD1,582.85 late Thursday.

At the other end of the large-cap index, Hargreaves Lansdown was the worst performer, ending down 8.2% as the fund supermarket reported a rise in assets over the first half of financial 2020, but saw a decline in new business.

At December 31, Hargreaves had GBP105.2 billion in total assets under administration, up 5.9% from the end of June and 22% higher than at the same point last year.

Hargreaves recorded GBP2.31 billion in net new business in the six-month period, down sharply from the GBP7.3 billion seen in the most previous six-month period, ending June 30, and down 8.7% compared to the final six months of 2018.

New business in the period, particularly in the second quarter, was hurt by weak investor sentiment, the company said.

Lower oil prices knocked oil majors Shell and BP. Shell's 'A' stock ended 2.1% lower and 'B' shares down 2.3%, with BP 2.2% lower.

Brent oil was quoted at USD56.86 a barrel, sharply lower than USD58.60 amid coronavirus fears.

Miners were lower, with the coronavirus stoking fears over Chinese economic growth and thus demand for commodities.

Steelmaker Evraz fell 4.8%, copper mine Antofagasta by 3.8%, while Anglo American fell 2.2%, Rio Tinto by 2.0%, BHP by 1.9%, and Glencore by 1.8%.

In the FTSE 250, Aston Martin was easily the best performer, closing up 24% after the luxury carmaker agreed to sell a GBP182 million stake to a consortium led by Canadian billionaire Lawrence Stroll, the owner of the Racing Point F1 team.

Aston Martin will raise a total of GBP500 million through the group's investment as well as a GBP318 million rights issue supported by major shareholders.

Aston Martin said a consortium led by Stroll has purchased a 20% stake. Aston Martin will place 45.6 million new ordinary shares at a price of 400 pence per share to raise the GBP182 million, which will be acquired by the consortium.

This will then be followed by an underwritten rights issue to raise GBP318 million, which will take place after the release of the company's annual results in February. The consortium is expected to participate in the rights issue taking its total investment to GBP235 million.

Stroll is set to join the company's board as executive chair, replacing Penny Hughes, as part of the deal.

Britvic rose 5.7% as the drinks firm said trading in the first quarter was "robust" and the company remains confident of achieving market expectations for its year ending September 30.

For the three months to December 31, Britvic's revenue was up 5.0% at GBP369.8 million.

TalkTalk Telecom ended 4.9% higher as it said it has a "structural advantage" following the GBP200 million sale of its FibreNation business, but third-quarter revenue suffered a slight annual dip.

In the quarter ended December, headline revenue was 0.8% lower year-on-year at GBP383 million but climbed 1.6% quarter-on-quarter.

Headline corporate revenue was 3.7% lower year-on-year at GBP79 million, but data revenue alone was 16% higher at GBP51 million.

The company added 148,000 new fibre customers, a 1.4% climb on the 146,000 customers it added in the third quarter the year prior.

The UK corporate calendar on Monday has third-quarter results from budget airline Ryanair. Later in the week, BP reports annual figures Tuesday, with packaging firm Smurfit Kappa and pharma giant GlaxoSmithKline due Wednesday.

Royal Mail and caterer Compass report quarterly figures on Thursday, with investment manager Ashmore unveiling interim results.

The euro stood at USD1.1083, up from USD1.1028 at the close Thursday.

Eurozone growth expanded in both final quarter and entire 2019, data from Eurostat showed.

Seasonally adjusted GDP rose by 0.1% in both the euro area and the EU28 during the fourth quarter of 2019 compared with the previous quarter, when it had grown by 0.3% in both zones.

Compared with the same quarter of 2018, seasonally adjusted GDP rose by 1.0% in the euro area and by 1.1% in the EU28.

According to a first estimation of annual growth for 2019, based on quarterly data, GDP grew by 1.2% in the euro area and 1.4% in the EU28.

Turning to inflation estimates, euro area annual inflation is expected to be 1.4% in January, up from 1.3% in December, according to Eurostat. The European Central bank targets inflation of "below, but close to, 2.0% over the medium term".

In the economic calendar on Monday is a swathe of manufacturing PMIs, including China, Japan, the eurozone, Germany, Ireland, France, Italy, the UK, and the US.

Financial markets in China are set to reopen on Monday after being closed over the past week for the Lunar New Year holiday.

By George Collard; georgecollard@alliancenews.com

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