UK markets start Friday modestly on the back foot as the coronavirus death toll reached 638 and luxury fashion retailer Burberry (BRBY) warned the disease outbreak was hurting its bottom line.
‘The outbreak of the coronavirus in mainland China is having a material negative effect on luxury demand’, said Burberry's chief executive Marco Gobbetti in a trading update on Friday.
The luxury fashion house said that the coronavirus outbreak is having a negative impact on retail sales in the Asian region. 24 of Burberry’s 64 stores in China are currently shutdown and its remaining stores are operating with reduced hours, which has led to a significant decline in footfall.
While Burberry has not updated its guidance for the current year, which ends on 31 March 2020, it warned that investors should expect trading improvements this year to ‘be limited’.
Burberry shares opened around 1% lower at £19.985, having declined from more than £23 in mid-January.
London shares fell in early deals as markets reacted to multiple companies warning shareholders their balance sheets could be hurt by the coronavirus outbreak.
The benchmark FTSE 100 index was off around 0.3% at 7,484.47 at 9am, with the mid cap FTSE 250 also slipping by a similar margin to 21,516.21.
Brent crude nudged 0.3% higher to $55.09 a barrel while gold also showed strength, up 0.8% to $1,564.75 an ounce.
CHINA GROWTH CUT
Putting further pressure on global stock markets was an S&P update that cut its forecast for Chinese economic growth by 0.7% to 5% in 2020 due to the coronavirus outbreak. The ratings agency’s estimate is based on the assumption that the virus will be contained by March, which may or may not prove optimistic.
Among the FTSE 100’s biggest losers on Friday is investment platform Hargreaves Lansdown (HL.) in the wake of founder Peter Hargreaves sale of a huge slug of shares via an open offer.
Shares in the business fell 2.4% to £16.675 after Peter Hargreaves sold more than 34.3m in the company at £16 per share, bolstering his fortune to the tune of £550m.
Mobile network giant Vodafone (VOD) heads the FTSE 100 leader board on Friday as buyers returned to the stock in the wake of its trading update on Wednesday.
Vodafone’s share price nudged nearly 2% higher to 153.78p, valuing the business at £41.2bn.
Shares in Just Eat Takeaway.com (JET) rose 1.4% on Friday to £79.65 after announcing plans to buy any remaining Just Eat shares following the merger with Dutch rival Takeaway.com.
The newly merged food delivery business started trading on the London market on Monday.
Travel company TUI (TUI) nudged 0.2% higher to 852.4p after announcing that it had sold its Hapag-Lloyd cruise ship asset into an equal joint venture with Royal Caribbean Cruises for an expected €700m.
The venture, to be named TUI Cruises, would be valued at €1.2bn, TUI said, adding that deal was expected to generate a ‘considerable’ book gain.
HOME MARGINS PRESSURE
House builder Bellway (BWY) softened 1.5% to £40.02 even as it reported record first half volume output, with completions rising 6.3%.
However, Bellway also warned that margins would continue to ‘normalise’ amid a backdrop of flat house prices.
Veterinary company CVS (CVSG) reversed 1% to £12.38, despite forecasting a material boost in first half adjusted earnings, driven by higher sales and lower employment costs.
Fellow veterinary company and pet product retailer Pets at Home (PETS) declined 1.4% at 302.4p, having announced it had appointed Ian Burke as its new chairman, to replace Tony DeNunzio.
Burke was currently chairman of home shopping company Studio Retail and was also a non-executive senior independent director of Intu Properties.
Healthcare services group Mediclinic (MDC) added 1.2% to 386.5p after it gained competition clearance its planned acquisition of Matlosana Medical Health Services in South Africa.
Audo-visual equipment distributor Midwich (MIDW:AIM) shed 1% to 530p, having acquired US counterpart Starin Marketing for up to $46.1m (£35.7m), including debt.
