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London pre-open: Stocks set for dip despite big drop in new coronavirus cases

By Alexander Bueso

Date: Friday 21 Feb 2020

London pre-open: Stocks set for dip despite big drop in new coronavirus cases

(Sharecast News) - Stocks are set to see a dip at the start of trading despite news of a sharp drop in new coronavirus cases in China.
Overnight, the World Health Organisation reported a 71% drop in the number of new cases in China from the day before to 548.

Commenting on that WHO update, 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."

Michael Hewson at CMC Markets UK, who appeared to be of a similar view, added: "There is also the contradiction of stock markets, bond markets, gold and the US dollar all rising at the same time. This is an unusual state of affairs and speaks to a market that is enormously uncertain as to the resilience of the global economy, as investors hedge across the board."

Against that backdrop, the FTSE 100 was being called to begin the trading day 9 points lower at 7,427.

On the economic side of things, the focus at the end of the week will be on the release of key manufacturing and services sector Purchasing Managers Indices, at 0930 GMT.

At that same time, the Office for National Statistics is due to publish publish sector net borrowing data for January.

"Given the higher-than-expected government spending in Q4 19, we will be closely watching developments in public sector finance data going into the end of the financial year as the state of the UK's public finances may influence the ability of the government to implement looser fiscal policies at the Budget," said analysts at Barclays.

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.

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