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London close: Footsie climbs on hopes coronavirus 'exaggerated' and slowing

By Alexander Bueso

Date: Tuesday 11 Feb 2020

London close: Footsie climbs on hopes coronavirus 'exaggerated' and slowing

(Sharecast News) - London stocks rose on Tuesday, boosted by hopes that the outbreak of the new China coronavirus might be slowing further and alongside record highs for the Dow Jones Industrials and S&P 500, together with the benchmark German stockmarket index, the Dax.
A well-received update from TUI also lent a hand.

"You just can't keep equity markets down these days," said Neil Wilson, chief market analyst at Markets.com, who attributed the gains in the Dax to the "weaker euro and persistent promise of more stimulus".

Regarding the so-called Wuhan virus, analysts at ShoreCap pointed to the latest situation update from the World Health Organisation released overnight, which showed that the compound daily growth rate of new cases had run below 10.0% for a second consecutive day.

Against that backdrop, the FTSE 100 and the second-tier index both put on 0.71% to reach 7,499.44 and 21,646.02, respectively.

Echoing the upbeat mood in markets, Bridgewater Capital's billionaire founder, Ray Dalio, said overnight that the impact on asset prices of investor concerns about the virus had been exaggerated, Bloomberg reported.

But not all analysts were as sanguine regarding the coronavirus, with Spreadex analyst Connor Campbell telling clients: "The coronavirus death toll is now above 1000.

"Professor Gabriel Leung, the head of public health at Hong Kong University, has warned the illness 'could infect 60%' of the world population. And there have been increased criticisms about how the Chinese government has handled the outbreak.

"However, a slowing infection rate, and the assumption that global central banks will step in to provide liquidity when needed, has allowed the coin toss of the market's mood to come up positive."

On home shores, investors were digesting the latest data from the Office for National Statistics, which showed the economy stagnated during the last quarter of 2019, as the political turmoil and uncertainty surrounding Brexit weighed heavily.

According to the first estimate from the ONS, the UK's gross domestic product was flat in the fourth quarter, in line with economists' forecasts, against revised growth of 0.5% in the third quarter. Year-on-year, fourth-quarter GDP rose 1.1%, down from a revised 1.2% in the previous three months.

Overall, the ONS said that for the whole of 2019, GDP grew by 1.4%. That was a slight improvement on 2018, but remained one of the slowest rates of growth since the financial crisis.

Following the GDP report, Fabrice Montagne and Abbas Khan at Barclays trimmed their forecast for growth in the first three months of 2020 by a tenth of a percentage point to 0.3% as a result of the expected impact that the coronavirus would have on Asia and Europe.

However, they kept their projection for all of 2020 at 1.0%.

In equity markets, TUI racked up strong gains after the travel company upgraded full-year profits guidance as higher demand at its markets and airlines unit offset costs from the Boeing 737 MAX aircraft grounding. The company forecast underlying earnings before interest and tax of €850m - €1.05bn, compared with €893m it reported in the previous period.

Russ Mould, investment director at AJ Bell, said: "Given the backdrop of travel fears around the coronavirus and pictures of an infected cruise ship all over the news, TUI's positive news has taken the market by surprise.

"This is a solid update and one certainly helped by the demise of former rival Thomas Cook which has enabled TUI and others to increase market share. However, the message may not be the same in three months' time if the coronavirus isn't contained."

Just Eat Takeaway.com was right behind on the leaderboard thanks to an upgrade to 'overweight' from analysts at JP Morgan, who said the outfit was taking market share from Deliveroo and UEats.

Airlines easyJet and IAG were also on the up and miners advanced, likely thanks to the improved sentiment around China, while William Hill rallied as it announced a strategic partnership with CBS Sports in the US.

Ocado rose even as it said its annual loss more than quadrupled as costs rose and the online grocer and logistics company paid for the destruction by fire of a high-tech warehouse.

JD Sports was up even as the Competition and Markets Authority said its ?90m takeover of Footasylum would "substantially" lessen competition. The CMA said its current view is that blocking the deal by requiring JD Sports to sell the Footasylum business may be the only way of addressing its competition concerns.

The stock was higher, however, as JD Sports said it had had a "robust" post-Christmas sales period in its key overseas markets and that earnings for the year to January 2020 were set to be "at least equal" to the top end of current market expectations of between ?403m and ?434m , after adjusting for IFRS16.

Kier Group was wanted after the government approved plans for the HS2.

Hammerson was boosted by an upgrade to 'buy' at Peel Hunt.

On the downside, UAE healthcare provider NMC Health was under the cosh again after US private equity firm KKR said it had not made a bid for the company.

Intu Properties was also knocked lower after Hong Kong property group, Link Real Estate, had walked away from an investment in the group.

Market Movers

FTSE 100 (UKX) 7,499.44 0.71%
FTSE 250 (MCX) 21,646.02 0.71%
techMARK (TASX) 4,168.19 0.76%

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 967.80p 13.06%
easyJet (EZJ) 1,552.00p 3.95%
International Consolidated Airlines Group SA (CDI) (IAG) 629.20p 3.76%
JD Sports Fashion (JD.) 873.00p 3.19%
Ocado Group (OCDO) 1,254.50p 3.08%
Flutter Entertainment (FLTR) 8,660.00p 2.85%
Carnival (CCL) 3,126.00p 2.69%
SSE (SSE) 1,642.00p 2.63%
Melrose Industries (MRO) 244.90p 2.34%
Smith (DS) (SMDS) 374.50p 2.29%

FTSE 100 - Fallers

NMC Health (NMC) 778.20p -15.98%
Tesco (TSCO) 253.80p -1.17%
Compass Group (CPG) 1,967.00p -1.16%
Bunzl (BNZL) 1,970.00p -0.86%
GlaxoSmithKline (GSK) 1,703.40p -0.83%
Relx plc (REL) 2,060.00p -0.72%
Centrica (CNA) 82.12p -0.68%
Diageo (DGE) 3,114.00p -0.65%
Burberry Group (BRBY) 1,985.50p -0.53%
Informa (INF) 783.60p -0.51%

FTSE 250 - Risers

William Hill (WMH) 192.30p 7.76%
Kaz Minerals (KAZ) 491.10p 4.71%
Hammerson (HMSO) 239.40p 4.63%
Ferrexpo (FXPO) 145.90p 4.10%
Polypipe Group (PLP) 572.00p 3.97%
Hunting (HTG) 320.00p 3.96%
Aston Martin Lagonda Global Holdings (AML) 470.00p 3.89%
Spirent Communications (SPT) 230.00p 3.84%
888 Holdings (888) 139.90p 3.78%
Wood Group (John) (WG.) 392.10p 3.40%

FTSE 250 - Fallers

Tullow Oil (TLW) 43.06p -4.31%
Finablr (FIN) 76.00p -3.31%
Beazley (BEZ) 588.50p -2.97%
NextEnergy Solar Fund Limited Red (NESF) 118.00p -2.87%
Watches of Switzerland Group (WOSG) 369.00p -2.69%
Apax Global Alpha Limited (APAX) 178.00p -2.60%
Marks & Spencer Group (MKS) 178.00p -2.36%
Kainos Group (KNOS) 848.00p -2.30%
TalkTalk Telecom Group (TALK) 115.40p -2.29%
GCP Infrastructure Investments Ltd (GCP) 123.60p -2.22%

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