LONDON MARKET OPEN: Stocks Continue Recovery Amid China Virus Spread

(Alliance News) - London stocks continued to rebound on Wednesday even as the spread of coronavirus, which unsettled markets at the start of the week, continued across China and the death toll mounted.

The FTSE 100 index was up 27.26 points, or 0.4%, at 7,507.95 early Wednesday. Since the week began, though, the index remains down around 1.0%.

The mid-cap FTSE 250 index was up 64.60, or 0.3%, at 21,497.66. The AIM All-Share index was flat at 953.72.

The Cboe UK 100 index was 0.3% higher at 12,723.10. The Cboe 250 was up 0.2% at 19,417.02, and the Cboe Small Companies up 0.1% at 12,464.98.

In mainland Europe, the CAC 40 in Paris was up 0.1% while the DAX 30 in Frankfurt was also 0.1% higher early Wednesday.

"The virus outbreak marches on but markets are trying hard not to over-react," said Kit Juckes at Societe Generale.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.7%. The Hang Seng index in Hong Kong closed 2.8% lower as the market re-opened from the Lunar New Year holiday, while financial markets elsewhere in China remained closed.

However, Juckes added: "I don't know if the slightly hysterical tone in the press about coronavirus can be met with market insouciance for very long. Risk aversion is likely to return in due course."

In the latest concerning development, British Airways has suspended all flights to and from mainland China.

The airline, which operates daily flights to Shanghai and Beijing from Heathrow, said it was halting the flights with immediate effect after the Foreign Office warned against "all but essential travel" to the country because of the virus outbreak.

The death toll in the country has risen to 132, with confirmed infections surging to nearly 6,000. Four cases have been confirmed in Germany, making it the second European country to report cases, after France.

Shares in BA-owner IAG were down 0.1% in early trade. They are down more than 6% in the past week.

Elsewhere in London, travel operator TUI was up 1.3% after HSBC raised the FTSE 100-listed stock to Buy from Hold.

Miner Fresnillo was up 1.2% despite reporting a fall in both silver and gold production in 2019.

Quarterly silver production of 13.8 million ounces, up 3.7% on the previous three months, brought full-year production to 54.6 million ounces, down 12% on 2018.

Gold production in the fourth quarter of 233,700 ounces was up 11% on the third quarter. Full-year production, though, was down 5.1% at 875,900 ounces due to expected lower output from Noche Buena and a lower ore grade at San Julian Veins.

Looking to 2020, and the miner expects to produce 51.0 million to 56.0 million ounces of silver. Gold production is expected in a range of 815,000 ounces to 900,000 ounces.

Wizz Air was up 1.0% after the airline raised its full-year profit guidance.

Revenue in the three months to December 31 totalled EUR637.3 million, up 25% on a year ago. Earnings before interest, tax, depreciation and amortisation also rose 25%, to EUR131.6 million.

Net profit for the quarter was EUR21.4 million, versus a loss of EUR21.0 million a year ago. Looking ahead, the company said it now sees net profit for the 2020 financial year between EUR350 million to EUR355 million, above previous guidance of EUR355 million to EUR350 million.

"As previously announced at our H1 results, Wizz Air has reinvested some of its outperformance of the first half in the third quarter, and will grow even faster in the fourth quarter," said Chief Executive Jozsef Varadi.

"Wizz Air also confirms that the current trading conditions continue to be favourable with a relatively benign competitive environment, stable fuel prices and a positive yield environment," Varadi continued. "Despite our additional investment in growth in the fourth quarter, the company is today raising its net profits guidance."

Focus in the day ahead lies on the Federal Reserve's latest interest rate decision, due at 1900 GMT.

This will be followed by a press conference with Chair Jerome Powell.

"Today's US Federal Reserve policy announcement is expected to be considerably less 'exciting' than the Bank of England tomorrow. Having reduced interest rates three times last year, Fed officials believe the economy is now in 'a good place'," said Lloyds Bank.

"Hence, the Fed is widely expected to keep interest rates on hold at the 1.5-1.75% target range," Lloyds continued. "There are no new forecasts at this meeting, so markets will be looking at the statement (which is expected to be broadly little changed from December) and the tone of Chairman Powell's press conference."

Among currencies early Wednesday, sterling was quoted at USD1.3006, up slightly from USD1.2993 at the London equities close on Tuesday.

The euro was quoted at USD1.1003 early Wednesday, soft compared to USD1.1008 late Tuesday. Against the yen, the dollar was trading at JPY109.07, soft versus JPY109.15.

In commodities, gold was quoted at USD1,567.00 an ounce early Wednesday, down from USD1,569.90 on Tuesday. Brent oil was at USD59.94 a barrel early Wednesday, flat on USD59.92 late Tuesday.

By Lucy Heming; lucyheming@alliancenews.com

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