(Alliance News) - London stocks attempted to continue Asia's overnight rally as fears over coronavirus eased following a slowdown in the number of new cases on Wednesday.
The FTSE 100 index was up 5.05 points, or 0.1%, at 7,504.49 early Wednesday. The mid-cap FTSE 250 index was up 58.21 points, or 0.3%, at 21,704.23. The AIM All-Share index was flat at 969.52.
The Cboe UK 100 index was down 0.1% at 12,708.02. The Cboe 250 was up 0.2% at 19,557.55, and the Cboe Small Companies up 0.1% at 12,431.44.
In mainland Europe, the CAC 40 in Paris was up 0.3% while the DAX 30 in Frankfurt was 0.4% early Wednesday.
European stocks were mildly higher on Wednesday after a rally in Asia overnight, with sentiment helped as the number of new coronavirus cases slowed.
The death toll from China's new coronavirus epidemic climbed past 1,100 on Wednesday as the World Health Organization urged global unity to combat the "grave threat".
Most of the deaths have been in Hubei and its capital, Wuhan, the epicentre of the crisis. But in a positive development, the number of new cases has fallen in Hubei for two straight days. Outside the province, the number of new patients has declined for the past week.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.7%. In China, the Shanghai Composite ended up 0.9%, while the Hang Seng index in Hong Kong ended 0.9% higher.
"Asian equities traded bid today after a chorus of "keep calm buy stocks" was heard echoing across dealing rooms in Asia this morning after China noted additional cases and deaths related to virus declined," said Stephen Innes, chief market strategist at AxiCorp.
"The market continues to price in further easing by the People's Bank of China," continued Innes. "I think 10bp MLF and LPR cuts are primarily priced in, but RRR cut and or anything more aggressive than 10bp will be a surprise factor that is starting to get priced into the markets."
In London, Royal Dutch Shell 'B' shares were up 1.2% and 'A' shares up 1.0% after HSBC raised the oil major to Buy from Hold.
Shell was also helped as oil firmed on Wednesday. Brent oil was trading at USD55.06 a barrel, higher than USD54.10 late Tuesday.
Gold, meanwhile, was quoted at USD1,564.32 an ounce early Wednesday, flat on USD1,564.39 on Tuesday.
Back in London, Dunelm was up 4.9% as the home furnishings retailer raised its full-year outlook following double-digit profit growth in its first half.
Revenue for the 26 weeks to December 28 amounted to GBP585.0 million, up 6.0% on a year ago. Pretax profit grew more strongly, up 19% to GBP83.6 million, as gross margin expanded to 51.5% from 50.3% a year prior.
Like-for-like sales rose 5.6% against a "strong" comparative of 7.8% in the period a year ago.
Dunelm raised its interim dividend by 6.7% to 8.0 pence per share.
"We have made good progress over the first half, following a strong performance last year, which is reflected in the significant growth delivered in both sales and profits," said Chief Executive Nick Wilkinson.
"The third quarter has started well, with a successful Winter Sale across the total retail system," he added. "As a result, we expect full year FY20 profit before tax to be slightly ahead of the top of the latest range of analyst expectations. We are monitoring the Coronavirus outbreak carefully. To date we have not assumed any material disruption to our supply chain or any financial impact in the year."
Plus500 rose 3.6% after the online trading services provider reported a "year of two distinct halves".
For all of 2019, trading income halved to USD354.5 million from USD720.4 million, while pretax profit dived to USD189.3 million from USD503.0 million.
Plus500, which offers trading in contracts-for-difference, said it performed robustly across all key metrics in the second half of the year compared to the first, with the latter hit by "extremely" low volatility in the first quarter. 2019 marked the first full year of trading under the new regulatory regime introduced in Europe, Plus500 noted, with customer trading patterns "adjusting through the year".
Turning to current trading, Plus500 said "positive momentum" has continued into 2020, reflecting heightened levels of volatility in financial markets.
"We finished 2019 in good financial and operational shape following a period of changes for the industry, which has provided a more certain regulatory outlook for Plus500 and the industry as a whole. We were particularly pleased with the strong improvement in financial performance in the second half of 2019 and believe that customer trading patterns have now adjusted following the regulatory changes introduced in Europe last year," said Chief Executive Asaf Elimelech.
Plus500 also on Wednesday set out plans for a new share buyback programme, aiming to purchase up to USD30.0 million in shares. It did, though, cut its total dividend for the recent year to USD0.6501 per share from USD1.9977 in 2018.
Babcock was down 1.8% after softening profit guidance.
The defence firm continues to see underlying revenue around GBP4.9 billion for the current financial year, ending in March, but underlying operating profit is expected around GBP540 million, compared to a previous guidance range of GBP540 million to GBP560 million.
Underlying earnings per share are seen in line with consensus.
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.
"The three large providers of helicopter services who operate worldwide in oil and gas have all emerged from Chapter 11 bankruptcy protection with reduced debt and written-down assets. This has effectively reset global market pricing levels, forcing us to respond quickly to remain competitive. We will also exit our oil and gas businesses in Ghana and Congo," said Babcock.
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".
"We will also write down assets and leases in our oil and gas business. We expect to incur an exceptional charge related to these issues of around GBP85 million, predominantly in oil and gas," said Babcock.
In forex, sterling was quoted at USD1.2969 early Wednesday, higher than USD1.2944 at the London equities close on Tuesday.
The euro traded at USD1.0916 early Wednesday, flat versus USD1.0917 late Tuesday. Against the yen, the dollar was quoted at JPY109.91 versus JPY109.87.
"The US dollar was little changed against the euro yesterday after statements from ECB President Lagarde and Fed Chair Powell seemed to indicate that near-term interest rate moves in either the Eurozone or the US are unlikely. Sterling strengthened after stronger-than-expected December GDP data, which were seen as further reducing the likelihood of a UK interest rate cut," said Lloyds Bank.
Powell appears in front of Congress again on Wednesday at 1500 GMT. Elsewhere in the economic events calendar, there is eurozone industrial production at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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Babcock (BAB)
Plus500 (PLUS)
Dunelm (DNLM)
