LONDON MARKET MIDDAY: Stocks Rebound; Pound Gets Brief Inflation Boost

(Alliance News) - London stocks on Wednesday managed to shake off the coronavirus-driven worries that had bogged down equities in the previous session, hoping China will support its economy with stimulus measures to counter disruption from the disease.

The FTSE 100 was up 50.98 points, or 0.7%, at 7,432.99 Wednesday midday after falling 0.7% on Tuesday.

The mid-cap FTSE 250 index was up 98.04 points, or 0.5%, at 21,776.50. The AIM All-Share index was up 0.6% at 969.91.

The Cboe UK 100 index was up 0.9% at 12,594.44. The Cboe 250 was up 0.4% at 19,626.45, and the Cboe Small Companies flat at 12,451.05.

In mainland Europe, the CAC 40 in Paris was up 0.7% and the DAX 30 in Frankfurt up 0.5%.

"European markets are gaining ground this morning, with a slight fall in coronavirus cases providing bulls with yet another reason to buy in despite ongoing fears over the economic implications of this current shutdown," said Joshua Mahony, senior market analyst at IG.

"Apple's warning provided some temporary downside amid warnings over demand and production, yet the upside we are subsequently seeing highlights the focus on Chinese stimulus to mask much of that decline," said IG's Mahony.

New figures showed the coronavirus death toll in China has surged beyond 2,000 with more than 74,000 infected. Hundreds more cases have been reported in two dozen countries.

South Korea reported 15 new confirmed cases – increasing its total by nearly 50% – including a cluster of at least 11 centred on the southern city of Daegu. Hong Kong reported a second death.

While China announced Wednesday there were 1,749 new infections, this was the lowest number of new cases this month. All but 56 new cases were in the epicentre of Hubei province.

Following on from Europe's upbeat start, Wall Street is on course for a higher open. The Dow Jones and S&P 500 are seen up 0.2%, while the Nasdaq Composite is pointed 0.3% higher.

To come in the international economic calendar on Wednesday is US producer price inflation at 1330 GMT, followed at 1900 GMT by minutes from the Federal Reserve's January meeting.

Commenting on the upcoming minutes release, Rabobank said: "Since the meeting was held, the various rate setters that have spoken have mostly argued that the stance of monetary policy is still appropriate. And, since the US should be a bit more shielded from the deteriorating expectations for the Chinese economy, the Fed will likely be able to maintain that argument for now."

In UK data, inflation accelerated sharply in January.

Consumer prices rose 1.8% year-on-year in January, a far faster rate than the 1.3% growth recorded for December. Month-on-month, prices fell 0.3% after a flat reading in December. Consensus, according to FXStreet, saw prices rising 1.6% year-on-year and slipping 0.4% on the month.

Prices of books, insurance and electricity helped to push up the annual inflation rate. Furniture and clothing dragged down the monthly reading.

"GBP/USD was given a nice boost by the robust UK inflation figures but the positive move was short-lived," observed David Madden at CMC Markets.

Following the UK inflation data, sterling was quoted at USD1.2977 at midday, lower than USD1.3021 at the London equities close on Tuesday.

The pound did, though, surge above the USD1.3020 mark shortly after the inflation reading, having traded around USD1.2980 just prior to the data. It then quickly gave up that gaom.

Elsewhere in forex, the euro traded at USD1.0788 on Wednesday at midday, down from than USD1.0817 late Tuesday. Against the yen, the dollar was quoted at JPY110.39, up from JPY109.81.

In commodities, gold was quoted at USD1,610.75 an ounce on Wednesday, up from USD1,602.83 on Tuesday. Brent oil was trading at USD58.54 a barrel, up from USD57.08 late Tuesday.

In London at midday, Berkeley was leading the charge in the FTSE 100, up 3.1% after HSBC upgraded the housebuilder to Buy from Hold.

NMC Shares slipped 3.9% after the private healthcare firm late Tuesday said it will "urgently seek clarity" over its former chair's "shareholding arrangements" after it received notice that his investment company sold GBP111.8 million worth of shares across a series of transactions earlier in February.

Bavaguthu Raghuram Shetty, founder of the Abu Dhabi-focused hospital group, resigned as non-executive chair on Monday. He had been banned from attending board meetings for inaccurately reporting shareholdings in the company.

Across six transactions between February 3 and February 6, BRS International Holding, of which Shetty is the sole shareholder, sold 10.9 million NMC shares for GBP111.8 million, according to an automatically generated statement received by NMC on Sunday.

International Consolidated Airlines was up 1.3% after Qatar Airways upped its stake in the British Airways owner to just over 25%.

The Qatari government-owned airline previously held a 21.4% stake.

"Our investment to date has been highly successful, and the announced increase in our shareholding is evidence of our continued support of IAG and its strategy," said Qatar Airways Chief Executive Akbar Al Baker.

In the FTSE 250, Hochschild Mining rose 6.9% after the gold miner said profit doubled in 2019 as it delivered "further strong progress".

The FTSE 250-listed silver and gold producer said revenue rose 7% to USD755.7 million, compared to USD704.3 million in 2018. Pretax profit doubled to USD76.8 million from USD38.4 million a year ago.

Hochschild said full-year attributable production was 477,400 gold equivalent ounces, exceeding guidance of 457,000 gold equivalent ounces. The company said it would target production of 422,000 gold equivalent ounces in 2020.

Man Group was up 7.0% after Exane BNP raised the asset manager to Outperform from Neutral.

By Lucy Heming; lucyheming@alliancenews.com

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