LONDON MARKET CLOSE: Stocks Sink As Coronavirus Death Toll Rises

(Alliance News) - Stocks in London ended sharply lower on Thursday on fears that the outbreak of the coronavirus in China will hit global growth.

The World Health Organisation on Thursday called an urgent meeting on whether to declare a global health emergency over the virus which has killed 170 people in China.

The WHO, which initially downplayed the severity of the disease, warned all governments to be "on alert" as China reported 1,700 new cases of the SARS-like virus which has infected 7,700 people and been detected in at least 15 countries.

The FTSE 100 index closed down 101.61 points, or 1.4% at 7,381.96. The FTSE 250 ended down 177.11 points, or 0.8%, at 21,291.88, and the AIM All-Share closed down 6.91 points, or 0.7% at 951.41.

The Cboe UK 100 ended down 1.5% at 12,505.65, the Cboe UK 250 closed down 0.9% at 19,243.32, and the Cboe Small Companies ended down 0.3% at 12,451.74.

In Paris the CAC 40 ended down 1.4%, while the DAX 30 in Frankfurt ended down 1.4%.

"Coronavirus fears are back at the forefront of traders' minds, hence why stocks have fallen today. The health crisis in China is deepening as the number of confirmed cases as increased, and so has the number of fatalities. Stocks that have exposure to China are bearing the brunt of the sell-off. Commodity, consumer as well as travel stocks are lower today," said CMC Markets analyst David Madden.

On the London Stock Exchange, Unilever ended the best blue chip performer, up 2.2% despite reporting mixed annual results.

For 2019, revenue was 2.0% higher at EUR51.98 billion from EUR50.98 billion, though pretax profit was 33% lower year-on-year at EUR8.29 billion from EUR12.36 billion.

Unilever, which owns names such as Dove soap and Ben & Jerry's ice cream, said underlying sales climbed 2.9% year-on-year in 2019, though growth was below its guided range following a fourth quarter "slowdown".

The company declared a fourth quarter dividend of EUR0.4104 per share, up 6.0% year-on-year from EUR0.3872 per share.

"While Unilever's full-year results make for grim reading, investors have taken comfort this morning from the fact that sales came in slightly above analysts' expectations. But Chief Executive Officer Alan Jope, who took over the reins of the consumer goods giant a year ago, clearly has a big job on his hands to arrest the slide in the firm's performance," Adam Vettesse, analyst at eToro said.

"Part of that plan could be to hive off part of Unilever's tea division, which was announced today. Whatever form that plan takes, investors will want to see instant results. But if it doesn't result in a significant boost to performance and its shares drop further, it would not be surprising to see Unilever become a takeover target once again as it was in 2017 when rival Kraft failed in a GBP115 billion bid," Vettesse added.

At the other end of the large cap index, BT Group ended the worst performer, down 7.4% after the telecommunications firm said third-quarter performance missed expectations.

Revenue for the nine months to December fell 2% to GBP17.25 billion, with pretax profit down 8.6% at GBP1.91 billion.

Adjusted earnings before interest, tax, depreciation, and amortisation was 3% lower at GBP5.90 billion, while normalised free cash flow fell 42% to GBP1.00 billion in part due to a deposit for the rights to European football.

BT said revenue declined due to "ongoing headwinds from regulation, competition, and legacy product declines". BT blamed the falling profitability on the lower revenue, higher spectrum fees, investment, and higher operating costs in Openreach, the firm's UK digital network business.

Carnival closed down 5.1% after Italian news service ANSA reported that one of its cruise ships in Italy was being investigated for potential cases of the coronavirus.

According to ANSA, there were two potential cases of coronavirus on board a Costa Crociere ship docked at the Italian port of Civitavecchia. Costa Crociere is a unit of the Anglo-American cruise line operator. The two tourists are in isolation, while the rest of the about 6,000 people on board cannot disembark, ANSA reported.

Royal Dutch Shell 'A' and 'B' shares both ended down 3.7% after the oil major reported a significant fall in annual earnings, driven by a decline in oil and gas prices.

Shell's 2019 current cost of supplies earnings attributable to shareholders excluding items, its preferred profit metric, fell 23% to USD16.46 billion, which is short of market consensus of USD16.74 billion.

The figure for the fourth quarter of the year slumped 48% to USD2.93 billion, and was around half the third-quarter figure. Shell's CCS earnings attributable to shareholders for the year dipped 36% to USD15.27 billion, with the fourth quarter figure down 88% to USD871 million.

Brent oil was quoted at USD58.60 a barrel at the equities close, sharply lower than USD59.94 at the close Wednesday.

In the FTSE 250, Centamin ended the best performer, up 5.5% after the Egyptian gold miner reported a revenue increase, helped by the rising price of the precious metal.

Gold was quoted at USD1,582.85 an ounce at the London equities close, up from USD1,569.44 late Wednesday, as demand for the safe haven asset increased.

In 2019, revenue was 9.1% higher year-on-year at USD658.1 million from USD603.2 million. The company declared a final dividend of 6.0 cents, taking its total payout to 10.0 cents, an 81% jump from 5.5 US cents in 2018.

At the other end of the midcaps, Avast ended the worst performer, down 13% after the antivirus software maker said it would close its Jumpshot analytics business which has been embroiled in a data privacy scandal.

Newspaper reports earlier this week said Avast allegedly collected data on what many of its users did online and sent it to Jumpshot, which then offered to sell the information to high-profile clients. Avast denied the allegations and began a review on Wednesday.

The pound was quoted at USD1.3102 at the London equities close, sharply higher from USD1.3003 at the close Wednesday.

Sterling was trading at six-week highs versus the greenback after the Bank of England in Governor Mark Carney's final monetary policy committee meeting, voted to keep its main interest rate at 0.75% by a 7-2 majority.

"The question facing the MPC at this meeting was whether the new decade would start with a bang," Carney told a press conference, adding that he had "no regrets" over his monetary policy record at the BoE since taking the reins in 2013.

The minutes of the latest BoE meeting showed that two doveish policymakers had cited "downside risks" to the bank's projections arising from "Brexit uncertainties and a weaker world outlook".

In addition, the central bank slashed its estimates for UK economic growth this year and next, one day before the country exits the EU.

The UK economy would expand by only 0.8% this year, the BoE said, down sharply on its previous 1.2% forecast. In 2021, gross domestic product was expected to grow 1.4%, down on November's estimate of 1.7%.

The BoE's decision to keep rates unchanged follows the US Federal Reserve's decision to keep its own policy interest rate steady on Wednesday. However, the Fed was on alert for possible contagion to the domestic and global economies.

Fed Chair Jerome Powell said the coronavirus posed a new risk to growth in China and elsewhere.

Analysts at FXPro told Alliance News: "BoE noted that there was a boost to the economy after the election and dropped reference that further rate increases would be 'limited and gradual'. The comments say that later this year, some policy tightening may be required if the economy recovers in line with BoE's forecasts.

"It is worth noting that two of the nine members of the MPC members voted to cut Bank Rate today. Hints of a willingness to raise the rate are in stark contrast with the caution of the markets after the recent Fed comments, that raised market expectations of June rate cut from the Fed above 50%. The apparent divergence in monetary policy spurred investor interest in the pound against the dollar and the euro."

The euro stood at USD1.1028 at the European equities close, up from USD1.1000 late Wednesday.

In economic news from the continent, unemployment in the eurozone fell to 7.4% in December, its lowest level since May 2008, the EU's Eurostat data office said.

The outcome beat forecasts by analysts surveyed by financial services provider Factset, which had predicted unemployment to remain unchanged at 7.5%.

In addition, inflation in Europe's largest economy Germany picked up in January, preliminary official data showed Thursday, driven by a bound in energy price growth.

Prices were 1.7% higher than a year before, federal statistics authority Destatis said, up from a 1.5% pace in December.

Until the end of 2019, price growth had been slowing over several months.

Measured using the harmonised index of consumer prices - the European Central Bank's preferred gauge - inflation picked to 1.6% annually.

Against the yen, the dollar was trading at JPY108.75, down from JPY109.07 late Wednesday.

Stocks in New York were lower at the London equities close amid coronavirus fears, on a busy day on the corporate front.

The DJIA was down 0.8%, the S&P 500 index down 0.9% and the Nasdaq Composite down 0.9%.

Coca-Cola's performance at the end of 2019 "strong", it reported, with earnings more than doubling.

Diluted earnings per share for the soft drinks giant in the last quarter of 2019 was USD0.47, more than doubled from USD0.20 per share year-on-year. Net income was USD2.07 billion, far higher than the USD927 million a year before.

Non-GAAP earnings per share rose 1% to USD0.44.

The stock was up 3.2% in New York.

Verizon Communications reported a "strong" end to 2019, with the most phone net additions in six years.

The telecom firm's earnings per share more than doubled for the fourth quarter, reaching USD1.23 from USD0.47. The adjusted figure was USD1.13, marginally up from USD1.12.

New York-headquartered Verizon booked a USD2.2 billion tax benefit, but also noted exceptional items of an early debt distinguished charge of USD2.1 billion and impairments in the Media business.

However, the stock was down 1.4% on Wall Street.

Tobacco giant Altria Group moved into a loss after making a significant impairment on Juul, an electronic cigarette maker in which it owns 35%.

The Richmond, Virginia-based firm has also cut earnings guidance for 2020 due to the Juul problems.

Altria posted a fourth-quarter diluted loss per share of USD1.00, compared to earnings per share of USD0.66 the year before. Adjusted earnings per share rose 7.4% to USD1.02.

The Marlboro cigarette maker's revenue for the last quarter fell by 1.8% to USD6.01, and net of excise taxes the figure was 0.3% higher at USD4.80 billion.

The stock was down 4.9% in New York.

On the economic front, the US economic growth was unchanged in the fourth quarter, according to official data.

Real gross domestic product increased at an annual rate of 2.1% in the fourth quarter of 2019, according to an estimate from the Bureau of Economic Analysis. The annual pace was unchanged from the third quarter and was also in line with economists' estimates.

Still to come in the US earnings calendar, e-commerce giant Amazon will report earnings after the closing bell on Wall Street.

The economic events calendar on Friday has UK mortgage approvals at 0930 GMT and eurozone GDP and inflation figures at 1000 GMT. In the afternoon, there are US personal consumption expenditure index readings at 1330 GMT - the core reading is the Fed's preferred gauge of inflation.

The UK corporate calendar on Friday has interim results from fund supermarket Hargreaves Lansdown, and third quarter results from energy company SSE and from home phone and broadband provider TalkTalk Telecom Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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