London midday: Stocks little changed amid mixed news on China coronavirus
By Alexander Bueso
Date: Friday 21 Feb 2020
(Sharecast News) - Stocks were little changed come midday, having started the morning lower, despite another increase in coronavirus cases in South Korea and data showing that companies across the UK and the Continent were facing increasing difficulties in keeping their supply chains properly stocked with inputs.
On more a positive note, in its 31st situation update, released overnight, the World Health Organisation reported a 71% drop in the number of new cases in China from the day before to reach 548.
Commenting on the latest data from the WHO, analysts at ShoreCap said: "We share the WHO's enthusiasm around these ongoing trends, but also its view that this is no time for complacency. The recent jump in cases in South Korea (from 104 to 31 in two days) although not representing a change in the epidemiology of the virus, does show its ability to cause sporadic outbreaks ex-China. The international community must remain vigilant and take robust action to end the outbreak at source."
Indeed, reports on Friday morning indicated that the number of coronavirus cases in South Korea had climbed past 200.
Against that backdrop, as of 1245 GMT, the FTSE 100 was trading just 0.04% lower to 7,433.64.
Investors were also continuing to take stock of the economic fallout from the COVID-19 coronavirus and not just in China.
IHS Markit's manufacturing sector Purchasing Managers' Index improved from January's reading of 50.0 to 51.9 for February (consensus: 49.8).
Even better, the composite output gauge for both manufacturing and services was unchanged from the month before at 53.3, thus pointing to a pick up in first quarter GDP growth to a quarter-on-quarter pace of 0.4%.
Nevertheless, roughly half of the improvement in the factory PMI was the result of a sharp drop in supplier delivery times, but not in response to heavy demand, rather because the coronavirus was keeping firms from sourcing the parts that they needed, explained Andrew Wishart at Capital Economics.
Further afield, au Jibun Bank's Japanese services sector Purchasing Managers' Index for February fell from a reading of 51.0 for January to 46.5 in February.
According to the lender, the PMI showed that the virus had hit tourism in Japan "particularly hard", with a gauge for new business in services registering its steepest rate of decline since June 2016.
In parallel, figures from the China Passenger Car Association showed that car sales for the first two weeks of February in the country had reportedly collapsed by 92%.
Pearson said it expected profit to fall in 2020 after the education publisher posted a 6% increase for 2019. Adjusted operating profit for the year to the end of December rose to ?581m from ?546m a year earlier as underlying revenue was unchanged at ?3.9bn. Unadjusted operating profit halved to ?275m from ?553m as sales fell 6% to ?260m. Pearson forecast adjusted operating profit between ?410m and ?490m for 2020 excluding its 25% stake in Penguin Random House.
Hammerson said it had sold a portfolio of seven retail parks and two others individually for a total of ?455m. The portfolio deal is the largest sale in the past decade, Hammerson said on Friday and follows the company's decision in 2018, to exit the sector.
Health, safety and environmental technology company Halma has acquired Utah-based Maxtec, it announced on Friday, which designs, manufactures and distributes oxygen analysis and delivery products for medical and non-medical applications. The FTSE 100 company said the cash consideration for Maxtec was $20m (?15.3m), on a cash and debt free basis, which would be funded from its existing facilities. It said Maxtec's revenue and aAdjusted EBIT for the 12 months to the end of March were $20.4m and $1.8m, respectively.
Market Movers
FTSE 100 (UKX) 7,429.19 -0.10%
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Berkeley Group Holdings (The) (BKG) 5,494.00p 2.65%
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Whitbread (WTB) 4,810.00p 1.65%
Persimmon (PSN) 3,313.00p 1.59%
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United Utilities Group (UU.) 1,061.00p 1.39%
FTSE 100 - Fallers
Pearson (PSON) 558.00p -4.45%
Smith & Nephew (SN.) 1,935.00p -2.22%
Burberry Group (BRBY) 1,878.50p -2.16%
Royal Dutch Shell 'A' (RDSA) 1,891.40p -1.84%
BP (BP.) 457.80p -1.80%
Lloyds Banking Group (LLOY) 55.56p -1.75%
Johnson Matthey (JMAT) 2,732.00p -1.66%
Royal Dutch Shell 'B' (RDSB) 1,891.00p -1.56%
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British Land Company (BLND) 560.20p -1.27%
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