ADVFN Morning London Market Report: Friday 14 February 2020

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London open: Stocks little changed as traders reassess coronavirus risks


Stocks slipped in early trading as traders grappled with the difficulty of pinpointing how far along China really was in controlling the outbreak of a new coronavirus in the country.

As of 0839, the FTSE 100 was trading 0.26% lower to 7,432.74, while front month Brent crude oil futures were 0.39% higher at $56.56 a barrel on the ICE.

The FTSE 250 on the other hand was adding 0.25% to 21,727.46.

On Thursday, Chinese officials revised the methodology employed to count coronavirus cases to include “suspected” cases, or patients diagnosed with CT imaging scans, which are less reliable than nucleic acid tests.

That led to a 14,840 person spike in the number of infections in Hubei province, the epicentre of the outbreak, taking the global tally to over 60,000 and resulting in the removal of two high-ranking Chinese officials.

“Markets are already adjusting to the new reality with shares in Asia falling and havens like gold and US treasuries rising. However, losses are limited for now,” said Jasper Lawler, director of research at LCG.

“If this new methodology means detection methods have improved and if the spike in the number of cases is a one-off, then a larger market sell-off might be averted.”

Overnight, 4,823 new cases were reported in the Chinese province of Hubei, with 3,095 of those patients diagnosed with CT scan.

Although the World Health Organisation has said that the bulk of the additional cases were days or weeks old, some researchers were warning that a far more severe outbreak was possible.

So severe were the risks that the Chinese government was reportedly considering postponing its annual National People’s Congress.

Yet there were also reports that Apple would reopen some stores in Beijing.

No major UK economic reports are scheduled for release on Friday.

Nonetheless, some analysts were looking for clarification from Number 10 as to whether the budget would still go ahead as planned on 11 March and if the government would stick to the fiscal rules, including maintaining a balanced budget in three years’ time.

Stateside, a raft of economic data is due out, starting with readings on monthly import prices and retail sales in December at 1330 GMT, followed by figures on industrial production at 1415 GMT and consumer confidence at 1500 GMT.

Meanwhile, in the euro area, investors will be watching the latest readings on euro area trade and gross domestic product covering the month of December and the fourth quarter of 2019, respectively.

Both reports were due out at 1000 GMT.

Drug giant’s bottom-line hit by writedowns

AstraZeneca‘s annual profit fell 14% as rising costs and higher asset writedowns offset sales increases at the pharmaceutical company. Operating profit for the year to the end of December declined to $2.9bn from $3.4bn a year earlier as revenue rose 10% to $24.4bn.

Royal Bank of Scotland reported a rise in annual profits as it forecast a £200m hit to its personal business from regulatory changes. The bank reported operating profit before tax of £4.23bn for the financial year, up from £3.3bn and declared a final ordinary dividend of 3 pence a share with a 5 pence special dividend. It also announced that it would change its parent company name from RBS to NatWest Group later this year.

Segro reported a 10.8% rise in its adjusted pre-tax profit in its full-year results on Friday, tp £267.5m, which it said reflected a record year of development completions, high customer retention rates, like-for-like rental growth and a low vacancy rate. The FTSE 100 property investment and development company said adjusted earnings per share stood at 24.4p for the 12 months ended 31 December, which was up 4.3% over 2018, or 9.9% higher excluding the impact of the SELP performance fee received in 2018.

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