(Alliance News) - Stocks in London were subdued at midday in London on Friday as investors continued to monitor the spread of coronavirus.
The death toll from China's virus epidemic neared 1,400 on Friday with six medical workers among the victims, underscoring the country's struggle to contain a deepening health crisis.
Nearly 64,000 people are now recorded as having fallen ill from the virus in China, with officials revealing that 1,716 health workers had been infected as of Tuesday.
The grim figures come a week after grief and public anger erupted over the death of a whistleblowing doctor who had been reprimanded and silenced by police after raising the alarm about the virus in December.
The FTSE 100 index was down 2.38 points at 7,449.65. The large-cap index is on track for a weekly decline of 0.1%.
The mid-cap FTSE 250 index was up 38.56 points, or 0.2%, at 21,712.46. The AIM All-Share index was flat at 965.28.
The Cboe UK 100 index was up 0.2% at 12,825.98. The Cboe 250 was up 0.3% at 19,601.46, and the Cboe Small Companies up 0.1% at 12,468.26.
In Paris the CAC 40 was down 0.2%, while the DAX 30 in Frankfurt was up 0.1%.
On the London Stock Exchange, Royal Bank of Scotland was the worst blue-chip performer, down 7.5% after the state-backed lender attempted to escape the sins of the past under disgraced former boss Fred Goodwin, by changing its name.
RBS, which was bailed out by the UK government after the financial crisis in 2008, said Friday it would rebrand itself NatWest Group, but did not offer any further details on the name change, only saying that it will happen "later this year".
The investment bank already is called NatWest Markets. RBS said it will look to "refocus" the investment bank, halving its assets.
For 2019, profit and net interest income beat expectations. The bank's operating pretax profit increased 26% to GBP4.23 billion from GBP3.36 billion in 2018. Operating pretax profit, according to company-compiled consensus, was forecast at GBP3.77 billion. Attributable profit for 2019 came in at GBP3.13 billion, compared to consensus of GBP2.52 billion. In 2018, when RBS reported its second profit in a decade, the figure was GBP1.62 billion.
The bank declared a final ordinary dividend of 3p and announced a 5p special dividend, taking its total 2019 distribution to 22.0p. The lender paid out a 12p special dividend at the interim stage, financed by the sale of its stake in Saudi Alawwal Bank.
The bank's net interest margin slipped in 2019 to 1.99% versus 2.09% in 2018. The lender's falling margins were blamed on "competitive pressures in the mortgage business" as front book margins remain lower than back book, referring to recent loans versus ones made previously.
Peers Barclays and Lloyds Banking Group were down 1.3% and 1.2% respectively in a read-across.
AJ Bell's Russ Mould said: "From an investor perspective the main transgression in this set of results is a modest cut to the ordinary dividend, even if this is supplemented by a hefty special payout.
"That was not the only disappointment in the numbers; the company’s net interest margin - the key measure of bank’s profitability - remains under pressure amid a very competitive market and a low interest-rate environment. The outlook statement is also far from cheery and its return on equity target has been downgraded."
AstraZeneca was down 0.5% after the drugmaker was cautious in its outlook, predicting its 2020 results will suffer as a result of the coronavirus outbreak in China.
In 2019, Astra's core EPS rose 1.2% to USD3.50 from USD3.46 a year, but this was below consensus of USD3.57 and was at the bottom of Astra's guidance for core EPS of between USD3.50 and USD3.70 at constant currency. It posted a 22% drop in 2019 pretax profit to USD1.55 billion from USD1.99 billion the year before.
Revenue rose 10% to USD24.38 billion from USD22.09 billion, just below consensus of USD24.40 billion.
For 2020, Astra is guiding for "a high single-digit to a low double-digit percentage" rise in total revenue, and "a mid- to high-teens percentage" increase in core earnings per share at constant currency. Astra's core figures exclude amortisation and impairment of intangible assets, restructuring charges and provisions, and other costs.
"All guidance assumes an unfavourable impact from China lasting up to a few months as a result of the recent novel coronavirus outbreak. The company will monitor closely the development of the epidemic and anticipates providing an update at the time of the first quarter of 2020 results," said Astra.
The pound was quoted at USD1.3035 at midday, flat from USD1.3045 at the London equities close Thursday, as the dust settles from the shock departure of Sajid Javid as UK chancellor of the exchequer on Thursday.
The member of parliament for Bronsgrove's seven-month stint as finance minister was dogged by rumours of bad blood with Prime Minister Boris Johnson's chief political adviser Dominic Cummings.
Number 10 sources suggested that Javid was forced out as Johnson wanted to avoid a repeat of the infamously fractious relationship between then-prime minister Tony Blair and his chancellor Gordon Brown.
Javid's resignation comes just a month before he had been due to deliver his first annual budget on behalf of Johnson's Conservative administration, appointed senior Treasury official Rishi Sunak to succeed Javid as chancellor of the exchequer.
Societe Generale's Kit Juckes said: "I expect sterling to continue to do reasonably well, [in the medium term], against the euro and dollar. In the short run however, now that EUR/GBP has returned to levels it reached within 36 hours of that referendum, I think the outlook is mixed, at best. Replacing Mr Javid with someone less inclined to thwart PM Johnson's fiscal plans may help sterling but navigating trade talks with the EU is likely to trigger bouts of nerves that see it reverse.
"Announcing a change of chancellor that implies the possibility of greater fiscal easing than would have happened otherwise, might qualify as a sterling-positive move. But it raises the bar for the actual Budget, since markets now price in easier policy than they did yesterday morning. We can't buy the same news, over an over again. A better fiscal/monetary mix AND a good trade deal, on the other hand, could do wonders for the pound."
The euro stood at USD1.0840 at midday, slightly lower than USD1.0850 at the European equities close Thursday, following disappointing economic data from the continent.
Eurozone economic growth slowed as expected in the last three months of 2019, data from Eurostat showed on Friday.
Annually, gross domestic product rose by 0.9% in the euro area in the fourth quarter of 2019, slowing from 1.2% in the third quarter. The fourth-quarter expansion missed market expectations, cited by FXStreet, of 1.0%.
Quarter-on-quarter, the eurozone economy expanded 0.1% in the fourth quarter of 2019 from the third, slowing from an increase of 0.3% in the third quarter from the second. The quarter-on-quarter reading was in line with economists' forecasts.
In addition, Europe's largest economy Germany stuttered in the fourth quarter of 2019 as its export-oriented industry's woes continued to weigh on growth, official data from Destatis showed.
German gross domestic product was flat quarter-on-quarter, while rising 0.3% on a year ago. Market consensus, according to FXStreet, had pencilled in a 0.1% quarter-on-quarter rise, and a 0.2% annual one.
The economy "remains in a weak phase," the economy ministry in Berlin said, highlighting "very weak" industrial production and incoming orders for manufacturing firms towards the end of the year.
IG Group said: "Much of the reasoning behind European underperformance can be laid at the door of the German growth figures which exhibited a lost quarter of 0% growth in the final three-months of 2019. The German economy has gone from being the bastion of eurozone growth to perhaps the greatest hinderance, with the industrial powerhouse continuing to suffer under the wrath of President Donald Trump's combative approach to global trade.
"Recent factory orders and industrial production figures out of Germany had highlighted a tough end to 2019, and those expectations go some way to explain the lack of sharp euro declines."
Against the yen, the dollar was trading at JPY109.82, flat from JPY109.80 late Thursday.
Stocks in New York were set for a higher open on Friday looking to set fresh record highs, with economic effects from the coronavirus remaining uncertain.
The DJIA was called up 0.1%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.1%.
Financial markets in the US will be closed on Monday for the Presidents Day holiday.
Brent oil was quoted at USD57.10 a barrel at midday, sharply higher from USD56.30 at the London equities close Thursday.
Gold was quoted at USD1,576.02 an ounce at midday, firm against USD1,574.60 late Thursday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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Astrazeneca (AZN)
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