UK share prices opened firmly on the back foot in early trade on Tuesday as investors feared the possible spread of the corona virus, which broken out in China, could hit growth forecasts there and elsewhere.
The worry is that this could turn out to be a new SARS-type virus, which affected millions of Chinese nationals and overseas travellers, sparking huge disruption to global trade.
While it is unknown at this stage how bad the corona virus might be, investors reacted by marking down UK stocks heavily on Tuesday, the benchmark FTSE 100 index tumbling 85 points, or more than a full percentage point, to 7,566.22.
The FTSE 250 mid cap index is also down 0.6%.
A surprisingly quiet day for corporate news is largely led by positive budget flyer EasyJet (EZJ), which lifted its forecast for revenue growth after enjoying ‘strong’ trading in the first quarter of its financial year.
The airline's revenue rose 9.9% to £1.425bn in the three months to 31 December 2019, with the number of passengers carried climbing 2.8% to 22.2m, sending the stock soaring to the top of the FTSE 100 leader board after rising nearly 5% to £15.18, their highest since August last year.
EasyJet said that revenue per seat in the first half of the year was now expected to increase by ‘mid to high single digits’, which was an upgrade on its previous expectation of a rise of ‘low to mid-single digits’.
GROWTH SPARK FOR DIXONS CARPHONE
There was a mixed picture from a trading update from Dixons Carphone (DC.), which reported flat like-for-like revenue growth over the key Christmas period despite a return to growth in its electricals business, where its’ mobile phones lines continue to suffer.
For the 10 weeks ended 4 January, the company reported revenue up 2% year-on-year, but flat on a like-for-like basis. Online sales grew 7%.
Dixons Carphone, operates through the Currys PC World and Carphone Warehouse chains, has a new strategy in place aimed at improving its online offering and making its physical stores more engaging for shoppers.
TalkTalk has also committed to a long-term wholesale agreement for residential and business products in areas where CityFibre builds. The agreement will depend on getting shareholder approval.
BETTER TO TRAVEL THAN ARRIVE FOR SSP
Airports convenience store group SSP (SSPG) said its first quarter revenue rose 6.3%, boosted by contract gains. On a like-for-like basis, revenue for the three months through December rose by a more modest 1.2%.
On a constant currency basis, total revenue rose 7.5%.
SSP shares rose close on 3% on Tuesday to 682p.
For the six months ended 30 November 2019, pre-tax profit fell to £101.2m, with revenue flat at £349.9m, although investors had largely anticipated the decline, explaining the stock’s modest 0.4% rise to 688.4p.
The company also announced that Paul Mainwaring, chief financial officer, would retire.
HOME COMFORTS FOR MEARS
Housing sector support provider Mears (MER) saw its share price jump nearly 7% to 310p after telling the market that it expected to report a 16% rise in underlying annual revenue, driven by its acquisition of MPS.
The company also said it was at ‘an advanced stage’ in a planned sale and exit from its domiciliary care operations.
Revenue from continuing activities for the year through December was seen rising to more than £900m, up from £773m year-on-year.
Half of the purchase price was payable upfront, with A$0.33m to paid in new Pennant shares with the balance in cash.