(Alliance News) - London stocks continued to trade firmly in the green on Wednesday, the FTSE 100 helped by Royal Dutch Shell and Anglo American as well as easing fears over the spread of coronavirus.
The FTSE 100 index was up 31.14 points, or 0.4%, at 7,530.58. The mid-cap FTSE 250 index was up 111.51 points, or 0.5%, at 21,757.53. The AIM All-Share index was flat at 969.45.
The Cboe UK 100 index was up 0.2% at 12,748.98. The Cboe 250 was up 0.5% at 19,618.46, and the Cboe Small Companies up 0.2% at 12,450.26.
In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 30 in Frankfurt was 0.9% higher early afternoon, having hit an all-time high of 13,747.58 in the session.
"There's no stopping these markets, it seems, with Europe back in record territory on the tiniest sliver of good news in regard to the, newly-named, COVID-19," said Craig Erlam at Oanda.
Another 97 people died in China, raising the national toll to 1,113, while more than 44,600 people have now been infected by newly named COVID-19 virus.
But in a positive development, the number of new cases has fallen in Hubei for two straight days, according to figures from the National Health Commission. Outside the province, the number of new patients has declined for the past week.
"In general, the number of new cases is now slowly decreasing," Zhong Nanshan, a scientist at China's National Health Commission, said in a video conference with medical staff in Wuhan on Tuesday.
"When does the turning point occur? I can't say. But I think it's at its peak in mid- to late-February," he said.
Given China's economic heft and position at the nexus of global supply chains, the virus is affecting companies far and wide and across multiple sectors across the world.
International conferences are also being affected, with this week's Singapore Air Show – Asia's biggest – badly hit by exhibitors withdrawing and low attendance.
"It's now hoped that, as far as the economy is concerned, we're just facing a bad quarter that could wipe around 1% of full year Chinese growth," Oanda's Erlam added. "I'm sure the data over the coming weeks will enlighten us further on this but, should that turn out to be true, that seems perfectly manageable."
Stocks in the US were also pointing to a higher open on Wednesday, with the Dow Jones called up 0.4%, the S&P up 0.3% and the Nasdaq 0.4% higher.
In forex, the euro traded at USD1.0915 on Wednesday, flat versus USD1.0917 late Tuesday.
The euro was unmoved despite data showing industrial production fell by more than expected in December.
Industrial production was down 2.1% month-on-month in December, having been stable in November. Production had been forecast to fall 1.6% in December, according to FXStreet consensus.
Year-on-year, industrial production slumped 4.1%, a far steeper fall than the 1.7% decline recorded for November. Market consensus had pencilled in a less-severe 2.3% fall.
December shows it is "too soon to call an end" to the eurozone industrial recession, said ING.
"As expected, the industrial decline continued at the end of the year although this decline was much worse than expected. A mixed picture has emerged for the start of 2020, but a fast recovery of growth seems unlikely," said Bert Colijn at ING.
Meanwhile, sterling was quoted at USD1.2986 Wednesday midday, higher than USD1.2944 at the London equities close on Tuesday. Against the yen, the dollar was quoted at JPY109.97 versus JPY109.87.
In commodities, gold was quoted at USD1,565.40 an ounce on Wednesday, flat on USD1,564.39 on Tuesday.
Brent oil was trading at USD55.12 a barrel, higher than USD54.10 late Tuesday.
This, along with a recommendation upgrade from HSBC, helped Royal Dutch Shell gain. HSBC raised the oil major to Buy from Hold, with Shell 'A' shares up 1.3% and 'B' shares up 1.7%.
Also rising on the back of a ratings upgrade was Anglo American, the stock was up 3.0% after UBS raised the miner to Neutral from Sell.
At the bottom of the FTSE 100 was Anglo-German tour operator TUI, down 4.0%, giving back some of the previous session's gains. The stock had risen 13% on Tuesday on an upbeat update amid strong travel demand.
Dunelm was the standout performer in the FTSE 250, up 11% after raising its outlook.
For the six months ended December 28, the homewares retailer reported pretax profit of GBP83.6 million, up 19% from GBP70.0 million the same period a year before. Revenue, meanwhile, grew by 6.0% year-on-year to GBP585.0 million from GBP555.8 million, and rose by 5.6% on a like-for-like basis.
The FTSE 250 constituent said its third quarter has started well and annual pretax profit is anticipated to be ahead of analyst expectations, which range from GBP135.0 million to GBP137.3 million.
Babcock International fell 4.0% after edging its profit guidance slightly lower.
For the year ending March, the company now expects underlying operating profit at around GBP540 million, which would represent an 8.2% decline from GBP588.4 million the year prior. Babcock's previous guidance for financial 2020 was for operating profit in the range of GBP540 million and GBP560 million.
Trading in Aviation has been mixed, the firm explained, with good performance in the UK and its international operations offset by "continued challenges" in southern Europe and the oil and gas business.
As a result, Babcock said it has lowered its expectations for the unit and, in response to the unit's trading, will be implementing "improvement and restructuring programmes". In oil and gas, Babcock expects to write down assets and leases, resulting in exceptional costs of GBP85 million.
On AIM, Scapa Group slumped 30% as it issued a profit warning.
Revenue for the year ending March 31 is expected to be broadly in line with market expectations at GBP306 million, though this would represent a 1.9% decline from GBP311.8 million. Trading profit will come in at GBP28 million, "significantly below consensus", Scapa cautioned, and 27% lower than the GBP38.2 million from the year prior.
Healthcare trading profit is expected to be lower than consensus due to "slower progress" in reducing costs than expected, while Industrial revenue is anticipated below market expectations due to "adverse macroeconomic conditions".
By Lucy Heming; lucyheming@alliancenews.com
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Babcock (BAB)
Anglo American (AAL)
Dunelm (DNLM)
TUI AG (TUI)
