LONDON MARKET OPEN: easyJet Climbs After Raising Revenue Guidance

(Alliance News) - Stock prices in London opened lower on Tuesday amid concerns over the spread of a virus in China, while easyJet bucked the trend as the airline reported a solid start to its financial year.

The FTSE 100 index was down 74.99 points, or 1.0%, at 7,576.45.

The mid-cap FTSE 250 was down 140.40 points, or 0.6%, at 21,706.78, and the AIM All-Share was down 1.12 points, or 0.1%, at 962.18.

The Cboe UK 100 index was down 0.7% 12,872.20. The Cboe UK 250 was down 0.2% at 19,665.66, and the Cboe UK Small Companies was flat at 12,459.40.

In European equities, the CAC 40 in Paris was down 0.2% and the DAX 30 in Frankfurt was down 0.1%.

On the London Stock Exchange, easyJet was the only blue-chip stock to open in the green, up 2.1% after the budget airline raised its revenue per seat guidance.

For the first quarter to December 31, easyJet said revenue rose 9.9% to GBP1.43 billion, passenger revenue increased 9.7% to GBP1.12 billion and ancillary revenue increased by 11% to GBP301 million.

easyJet said it expects first-half revenue per seat to increase by mid-to-high single digits, compared to a previous forecast for it to rise by low-to mid-single digits. The airline's revenue per seat in the first half financial 2019 was GBP50.71.

Passenger numbers in the quarter increased by 2.8% to 22.2 million, driven by an increase in capacity of 1.0% to 24.3 million seats. Total airline revenue per seat increased by 8.8% at constant currency.

Looking ahead, easyJet is guiding for its full year capacity to grow by 3%, with interim capacity to rise by 1.5%. The interim guidance is slightly behind the previous guidance of 1.7%; this is to account for the strikes in France.

"This is a strong operational performance from easyJet, although as ever there's a lot they can't control. There's very little management can do if the French air traffic controllers decide to strike, but they have benefited from Thomas Cook's collapse," said Hargreaves Lansdown analyst Will Ryder.

At the other end of the large cap index, BHP Group was down 1.7% after the Anglo-Australian miner kept the majority of its annual production guidance unchanged.

For the six months to the end of December, BHP's copper production was 885,400 tonnes, up 7% from 825,300 tonnes the year before, as output grew from the Escondida and Pampa Norte mines in Chile, and the Olympic Dam mine in Australia.

The group kept its annual copper production guidance unchanged at 1.71 million tonnes to 1.82 million tonnes.

Fellow Anglo-Australian miner Rio Tinto was down 2.0%.

Mondi was down 1.5% after JPMorgan cut the paper and packaging firm to Neutral from Overweight.

In the FTSE 250, Dixons Carphone was the best performer, up 5.0% after the electrical goods and mobile phone retailer said trading in the peak festive season in the UK was solid.

Dixons' revenue for the 10 weeks to January 4 was 2% higher on a reported basis, but was flat like-for-like.

London-headquartered Dixons said there was "broad-based" growth in televisions, gaming, smart technology, and small domestic appliances, while the decline in Mobile revenue was in line with expectations. Dixons managed to increase market share both in-store and online in the Electricals segment, it noted.

The Japanese Nikkei 225 index closed down 0.9%. In China, the Shanghai Composite closed down 1.4%, while the Hang Seng index in Hong Kong closed down 2.7%.

Asia stepped up its defences Tuesday against a new SARS-like virus, introducing mandatory screenings at airports of arrivals from high-risk areas of China as authorities move to head off a billowing regional health crisis.

From Bangkok to Hong Kong and Seoul to Sydney, authorities have gone onto high-alert over the new coronavirus, following China's confirmation of the first case of human-to-human transmission of the deadly illness.

Four people have died in China while scores more have been infected with the virus.

Cases have been detected in Thailand, Japan and South Korea as the World Health Organization said it would meet to discuss declaring a global public health emergency over the outbreak.

The Bank of Japan slightly upgraded its growth forecast for the world's third-biggest economy but kept its monetary policy unchanged.

The central bank said after a two-day policy gathering that it now expects 0.9% expansion in the year to March 2021, an upgrade from a previous projection of 0.7%.

The brighter assessment came after Prime Minister Shinzo Abe issued a stimulus package last year to prop up the economy and damp the effects of an October hike in consumption tax from eight to 10%.

The world's business and political elite, including US President Donald Trump, gather in Davos, Switzerland for the start of the World Economic Forum on Tuesday.

"The WEF is going to be the major theme during the European session. This is because influential individuals will occupy the stage and among them is president of the US Donald Trump, who is slated to speak later this morning," said AvaTrade analyst Naeem Aslam.

The pound was quoted at USD1.2997 early Tuesday, flat from USD1.2998 at the London equities close Monday. The euro was quoted at USD1.1094 early Tuesday, firm from USD1.1083 late Monday.

Against the yen, the dollar was trading at JPY109.97, down from JPY110.15 late Monday.

Gold was quoted at USD1,560.33 early Tuesday, flat against USD1,560.87 late Monday. Oil was trading at USD64.50 early Tuesday, down from USD65.18 late Monday.

The economic events calendar on Tuesday has UK unemployment data at 0930 GMT.

"Ahead of the Bank of England's MPC meeting, today's labour market report will be closely watched. But it is not expected to make a clear cut case either for or against a rate cut. In particular, while it's expected to report a stable unemployment rate at 3.8% in the three months to November, it is also expected to show a rebound in job growth to above 100,000 for the first time since June," said analysts at Daiwa Capital Markets.

Financial markets in the US reopen on Tuesday after being closed for a holiday on Monday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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