London midday: Travel and Leisure stocks punished as coronavirus jumps continents
By Alexander Bueso
Date: Thursday 27 Feb 2020
(Sharecast News) - Travel-related stocks dragged London's top indices lower as the epicentre of new Chinese coronavirus cases shifted to the Continent.
Overnight, in its 37th situation update, the World Health Organisation said that the number of new Chinese cases slipped to 412, taking the total there to 78,191, while in the rest of the world the number of new cases increased by 459 - albeit to only 2,918.
The news came as Germany's health minister, Jen Spahn, warned that the country was at the beginning of an epidemic after a 47-year old man in Dusseldorf was quarantined after attending a carnival.
Commenting on that shift in the caseload of new COVID-19 infections, IG analyst, Josh Mahony, said: "what was a centralised focus on Italian containment efforts has now turned into a European-wide crisis as new cases pop up throughout the continent."
By noon, the FTSE 100 was falling 1.88% to 6,908.93, alongside a 0.31% dip in Sterling versus the US dollar to 1.2869, while against the euro it was retreating 0.84% at 1.1759.
IAG, Esayjet and TUI were all at the bottom of the pile, amid a 6.15% downdraft in the Stoxx 600 sector gauge.
In the background, futures on the S&P 500 were pointing to a 28.0 point fall at the opening bell on Wall Street to 3,082.25 after health officials in California reported the first case of local transmission and on the heels of a warning from US technology giant Microsoft that it would not meet some of its third quarter guidance due to the coronavirus's impact.
That warning prompted Rabobank analysts to muse out loud: "We have highlighted previously the fact that China's far greater importance as a link in the global supply chain sees comparisons of the potential impact of coronavirus with that of SARS some 17 years ago very much wide of the mark."
On a related note, analysts at BofA Securities cut their 2020 forecast for growth in global gross domestic product to 2.8% - the least since 2009.
Analysts at Goldman Sachs and Citi meanwhile were anticipating further losses in US stocks as a result of the uncertainty around the coronavirus and how and when the Federal Reserve would respond, Bloomberg reported.
US politics were also in focus.
Speaking to broadcaster CNBC, DoubleLine Capital founder, Jeffrey Gundlach, said: "if people get more worried about Bernie Sanders and they start to price in his spending programs, then you could really start to see trouble in both bonds and stocks, which could really be on a rough ride."
In stockmarkets, IAG, Easyjet and TUI were the among the biggest faller on the top-flight index as traders moved to price-in the near-term hit to travel.
But the biggest drop was in WPP, after the advertising giant posted a decline in full year pre-tax profits and forecast flat organic growth and operating profit margins for the current fiscal year.
Pre-tax profits at WPP fell to ?982m from ?1.2bn as revenue less pass-through costs slipped 0.3% to ?10.8bn.
Barclays was another notable faller and was registering some of the biggest trading volumes on the top-flight index.
Hikma Pharmaceuticals was the top gainer on the FTSE 100 after reporting a 6% improvement in group core revenue in its preliminary results to $2.2bn (?1.7bn).
Rentokil was right behind following rise in full-year profit as it benefited from an increasing presence in growth markets and higher levels of customer retention.
Over on the second-tier index, Finablr was biggest percentage loser after shares of NMC Health were suspended amid ongoing serious doubts on the part of some analysts around its accounting.
Aston Martin skidded lower alongside after the luxury sportscar-maker warned of the impact of the coronavirus on its key Chinese market and announced that its finance chief would step down before the end of April.
Stock in Hunting was bolstered after the energy services group launched its first share buyback the day after reporting a decline in annual profit caused by a slowdown in the US shale gas industry.
Market Movers
FTSE 100 (UKX) 6,905.62 -1.94%
FTSE 250 (MCX) 20,097.26 -2.55%
techMARK (TASX) 3,933.14 -1.52%
FTSE 100 - Risers
Hikma Pharmaceuticals (HIK) 1,902.50p 4.22%
Rentokil Initial (RTO) 506.80p 2.26%
RSA Insurance Group (RSA) 543.40p 2.14%
British American Tobacco (BATS) 3,282.00p 1.94%
Reckitt Benckiser Group (RB.) 6,185.00p 1.41%
Polymetal International (POLY) 1,324.50p 1.22%
National Grid (NG.) 1,058.80p 1.01%
GlaxoSmithKline (GSK) 1,648.00p 0.94%
Severn Trent (SVT) 2,601.00p 0.46%
Unilever (ULVR) 4,404.00p 0.40%
FTSE 100 - Fallers
WPP (WPP) 777.40p -14.42%
easyJet (EZJ) 1,060.50p -11.81%
International Consolidated Airlines Group SA (CDI) (IAG) 509.40p -8.97%
Evraz (EVR) 351.40p -6.69%
TUI AG Reg Shs (DI) (TUI) 667.20p -6.55%
Barclays (BARC) 155.46p -6.32%
Burberry Group (BRBY) 1,667.50p -4.80%
JD Sports Fashion (JD.) 746.80p -4.72%
Legal & General Group (LGEN) 275.10p -4.71%
Persimmon (PSN) 2,941.00p -4.45%
FTSE 250 - Risers
Hunting (HTG) 315.40p 7.87%
Drax Group (DRX) 266.20p 2.46%
Vesuvius (VSVS) 415.60p 1.07%
Contour Global (GLO) 179.80p 0.45%
GCP Infrastructure Investments Ltd (GCP) 119.60p 0.34%
Genus (GNS) 3,220.00p 0.31%
AJ Bell (AJB) 373.50p 0.27%
Convatec Group (CTEC) 208.80p 0.19%
NextEnergy Solar Fund Limited Red (NESF) 117.50p 0.00%
Daejan Holdings (DJAN) 8,020.00p 0.00%
FTSE 250 - Fallers
Finablr (FIN) 59.00p -15.41%
G4S (GFS) 169.20p -12.69%
Aston Martin Lagonda Global Holdings (AML) 350.90p -10.26%
Tullow Oil (TLW) 32.36p -8.85%
Wizz Air Holdings (WIZZ) 3,391.00p -8.72%
Marks & Spencer Group (MKS) 158.45p -7.85%
Cineworld Group (CINE) 153.40p -6.69%
Frasers Group (FRAS) 415.40p -6.65%
Bakkavor Group (BAKK) 116.60p -6.42%
4Imprint Group (FOUR) 2,890.00p -5.86%
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