(Alliance News) - Stock prices in London are expected to open broadly unchanged on Friday, despite health concerns hurting market confidence, as investors look toward US-China trade developments.
In early company news, AstraZeneca and SEGRO both reported strong revenue growth but a decline in annual pretax profit. Royal Bank of Scotland Group, meanwhile, proposed a name change after better-than-expected performance in 2019.
IG futures indicate the FTSE 100 index is to open 4.57 points higher at 7,456.60. The UK index closed down 82.34 points, or 1.1%, at 7,452.03 on Thursday.
The pound was quoted at USD1.3051 early Friday, firm from USD1.3045 at the London equities close Thursday. The euro was quoted at USD1.0838 early Friday, broadly flat from USD1.0850 late Thursday.
Against the yen, the dollar was trading at JPY109.78, broadly flat from JPY109.80 late Thursday.
"European equity markets largely lost ground yesterday as the coronavirus fears were reignited," said CMC Markets UK Analyst David Madden.
The death toll from China's virus epidemic neared 1,400 on Friday, as the US complained of a "lack of transparency" from Beijing over its handling of a crisis that has fuelled global panic.
Nearly 64,000 people are now recorded as having been made ill by the virus in China, with the last two days showing a steep rise after a change in diagnostic methods.
The National Health Commission disclosed a statistical error, however, saying it removed 108 deaths in Hubei that had been double-counted, but the nationwide toll still rose to 1,380 on Friday.
The deepening crisis in China has caused fears of more global contagion, with Vietnam locking down villages after finding new cases and Japan becoming the third place outside the mainland on Thursday to report a death.
More than two-dozen countries have now reported hundreds of cases among them.
"The coronavirus crisis rumbles on but in the Asian session dealers were concentrated on trade. Dealers are waiting for Beijing to lower levies on USD75 billion worth of US imports – a pledge they made last week," said Madden.
The Japanese Nikkei 225 index closed down 0.6%, but the Shanghai Composite closed up 0.1%, and the Hang Seng index was up 0.4% in late trade in Hong Kong.
Back in London, RBS said profit and net interest income beat expectations in 2019, and also said it planned to rename the parent company as NatWest Group. Already its investment bank is called NatWest Markets.
The lender did not offer any further details on the name change, only that it will happen "later this year".
RBS also expects 2020 to "challenge" its ability to generate income, with its own economic forecasts predicting a UK base rate cut in the short term.
In 2019, the state-backed lender'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
The bank's attributable profit for 2019 came in at GBP3.13 billion, compared to consensus of GBP2.52 billion. In 2017, when RBS reported its second profit in a decade, the figure was GBP1.62 million.
Net interest income for 2019 was down 7.0% year on year at GBP8.05 billion from GBP8.66 billion, but outperformed against GBP8.02 billion consensus.
Total income was GBP14.25 billion, compared to 2018's GBP13.40 billion and the market expectation of GBP13.66 billion.
The bank declared a final ordinary dividend of 3 pence 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 stage, financed by the sale of its stake in Saudi Alawwal Bank.
Drugmaker AstraZeneca reported a year of "strong" revenue growth amid the launch of new medicines - with sales of new medicines advancing by 59% in 2019 to USD9.91 billion - and said it expects these trends to continue in 2020.
Pretax profit fell to USD1.55 billion in 2019 from USD1.99 billion a year earlier, despite revenue rising to USD24.38 billion from USD22.09 billion. Astra's profit was hurt by increased research & development costs and selling, general and administrative expenses.
More positively, Astra said sales in Emerging Markets jumped by 18% to USD8.17 billion, with sales growth in China up 29%. US sales increased by 13% in the year to USD7.75 billion and Japan sales increased by 27% to USD2.55 billion.
"Driven by a strong team, 2020 is anticipated to be another year of progress for AstraZeneca. We are becoming a better-balanced business, both regionally and through our medicines. This transition is a further step towards improving operating leverage and cash generation," said Chief Executive Pascal Soriot.
Property investment company SEGRO named 2019 as a "successful" year amid "excellent" financial and operational results.
The company's EPRA net asset value increased by 8.9% to 708 pence as at December 31 from 650p reported at the end of 2018.
Adjusted pretax profit, meanwhile, grew by 11%, thanks to a record year of development completions, high customer-retention rates, like-for-like rental growth, and a low vacancy rate, SEGRO highlighted. Reported pretax profit declined, however, to GBP902.0 million from GBP1.10 billion year-on-year amid lower property gains.
Like-for-like net rental income growth improved by 4.7% over the year, with average 18% uplift on rent reviews and renewals. As a result, revenue jumped to GBP432.5 million from GBP369.0 million a year ago.
SEGRO upped its full-year dividend by 10% to 20.7p, having previously paid 18.8p a share.
Elsewhere, Airtel Africa said its Malawi unit has completed the initial public offering on the local stock exchange, which was fully subscribed and raised MK27.92 billion, about USD37.5 million.
Earlier in December, the FTSE 250 mobile operator said Airtel Malawi will carry out an initial public offering on the Malawi Stock Exchange, but did not say what use would be made of the funds raised.
The price has been set at MK12.69 per share and 2.20 billion shares were issued, representing 20% of shares outstanding.
The company itself is relatively new to the London market, having floated in June in 2019. It is a subsidiary of India's Bharti Airtel, operating in 14 countries across Africa. It placed shares in its initial public offering at 80 pence per share.
Alfa Financial Software said it has secured a global partnership agreement with Accenture to market and work together on software implementation projects worldwide.
"Partnership is a fundamental part of our growth strategy, and working with a partner like Accenture will help us accelerate our efforts to deliver Alfa to customers who want to become digital leaders," said Chief Executive Andrew Denton.
On the economic front, the German economy stuttered at the end of 2019, 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.
After a "dynamic start" in the first quarter, with growth up 0.5% sequentially, and a decline in the second quarter of 0.2%, there had been a slight recovery in the third quarter of the year, Destatis said, but GDP failed to rise in the final three months of the year.
The economic events calendar on Friday has GDP readings from the eurozone at 1000 GMT respectively. In the afternoon, there are US retail sales figures at 1330 GMT.
In commodities, gold was quoted at USD1.575.50 an ounce early Friday, higher than USD1,574.60 late Thursday.
Brent oil quoted at USD56.31 a barrel early Friday, flat from USD56.30 late Thursday.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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Astrazeneca (AZN)
Segro (SGRO)
Alfa Fin (ALFA)
Airtel Africa (AAF)
