It is too early to call the coronavirus a pandemic but the Asian outbreak is still casting a pall over the mood of investors, who retrenched back into risk off mode on Thursday.
Cases and deaths continue to rise, airlines are slashing flight schedules and factories in China have been extending holidays into February. The mood in the market is one of severe concern, and that is having ma severe impact on stock markets. Overnight, Hong Kong shares tumbled, losing 2.6% while Japan’s Nikkei closed off more than 1.7%.
The UK’s benchmark FTSE 100 slumped more than 50 points in early trade on Thursday, or about 0.7%, hitting close to 2020 lows at 7,434.30. The sell-off is widespread with the mid cap FTSE 250 also down 0.3% as the pound lost ground against major currencies and oil prices declined.
Brent crude, the international benchmark for oil buyers and sellers, was down 1.7% at $58.80 a barrel at 9am.
BT IN ‘SLIGHT’ MISS
Disappointing corporate announcements have done little to lift the bleak mood, telco giant BT (BT.A) today announcing an third quarter miss, and revealing it faces a £500m hit from the government’s decision to cap Huawei’s 5G network involvement.
That sent the stock to the top of today’s FTSE 100 loser board, the share price slumping 4.2% to 167.98p.
The government said Huawei's equipment will only be allowed to account for 35% of kit used in the non-core part of the UK network. This means that telecoms groups may have to swap equipment, such as radio masts, in order to meet the cap.
BT’s revenues for the three months to 31 December dropped 3% to £5.7bn while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) declined 4% to £1.9bn.
‘BT delivered results slightly below our expectations for the third quarter of the year, but we remain on track to meet our outlook for the full year’, insists BT's chief executive Philip Jansen.
Profits at oil giant Royal Dutch Shell (RDSB) fell last year as the price of oil and gas declined, adding to the overall market drag. Shell shares sank more than 4% in early trade to £20.44.
Shell said annual earnings attributable to shareholders sank 36% to $15.3bn (about £11.8bn), with earnings in the final quarter of the year tumbling 88% to $871m. Its fourth quarter profits were hit by charges the company took for impairments on its onshore natural gas fields in North America.
Household products giant Unilever (ULVR) said it expects sales growth for its new financial year to be in the ‘lower half’ of its 3% to 5% range after revenue fell ‘slightly below’ expectations in 2019 because of a slowdown in the fourth quarter.
Yet investors appeared relieved that things were not worse, pushing the shares nearly 2% higher to £45.23.
Unilever forecasts an improvement in the second half of 2020 but chief executive Alan Jope said that ‘while we expect an improvement from the fourth quarter of 2019 into the first half of 2020, first half underlying sales growth will be below 3%.’
Spirits and Guinness-owner Diageo (DGE) reported a rise in half year profits, boosted by a strong performance in China. But the group expects sales slower sales growth ahead because of ‘uncertainty in the global trade environment’, presumably a nod to the coronavirus in China, where it sells at lot of booze.
That saw the share price continue recent weakness, dipping 5.5p to £31.045.
The first half was held back by a strong pound and a volatile backdrop across businesses in India, Latin America and Caribbean and travel retail.
The company, whose brands include Smirnoff, Johnnie Walker, Tanqueray, Gordon's gin, as well as pints of the black stuff, reported that in the six months to 31 December, operating profit increased 0.5% to £2.44bn.
RECORD AUM FOR ST JAMES’S
Wealth manager St James’s Place (STJ) climbed 2% to £11.64 as it reported funds under management ended 2019 at a record £117bn and confirmed a ‘robust set’ of new business results.
Paragon Banking (PAG) is 0.8% lower at 523p following a trading update for the three months ended 31 December 2019, which reported new business volumes up 3.7% on the previous year to £684.9m.
Specialist buy-to-let lending was 1.1% higher year-on-year at £375.4m, while other mortgage and amateur buy-to-let volumes were lower in comparison.
Renishaw (RSW), the engineering company, nudged 0.5% higher to £41.82 despite a ‘challenging trading period’ in the first half of 2020. The period saw revenue for the six months ended 31 December 2019 at £259.4m, down 8% on the £296.7m recorded in the same period a year earlier.
It reported adjusted pre-tax profit of £14.3m in the first half period, compared with adjusted previous year of £59.6m, which it said was primarily due to the reduced revenue.
Private equity group 3i (III) made 0.6% gains to £11.19 on the news that it saw a rise in net assets in its fiscal third quarter led by growth in its private equity and infrastructure businesses.
Cybersecurity company Avast (AVST) continued to fall on Thursday after recent speculation about customers data sales via its offshoot Jumpshot.
The shares fell more than 5% to 431p after the company announced it was looking to offload its analytics business amid privacy concerns, but said the move would not hurt annual performance.
Avast shares have slumped from 551p since the rumours first broke earlier this week.
Russian steel business Evraz (EVR) rallied 3% to 380.4p after reporting a rise in quarterly steel sales in the fourth quarter of last year.
