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London open: Stocks off to volatile start as coronavirus cases rise in South Korea

By Alexander Bueso

Date: Friday 21 Feb 2020

London open: Stocks off to volatile start as coronavirus cases rise in South Korea

(Sharecast News) - Stocks have started the morning lower, tracking a dip for shares on Wall Street overnight and as investors try to make sense of the latest news on the Chinese coronavirus and its impact on the global economy.
On 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 0918 GMT, the FTSE 100 was trading 0.63% lower to 7,389.76.

Investors were also continuing to take stock of the economic fallout from the COVID-19 coronavirus and not just in China.

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.

Back in China meanwhile, car sales for the first two weeks of February had reportedly collapsed by 92%.

Further complicating matters, investors were already jittery before the latest news out of South Korea.

As Michael Hewson at CMC Markets UK put it: "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."

Neil Wilson at Markets.com was in a similar frame of mind, predicting that investors were in for a volatile session.

Elsewhere 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.

Market Movers

FTSE 100 (UKX) 7,394.61 -0.57%
FTSE 250 (MCX) 21,837.09 -0.14%
techMARK (TASX) 4,174.89 0.21%

FTSE 100 - Risers

Polymetal International (POLY) 1,336.00p 2.34%
Berkeley Group Holdings (The) (BKG) 5,432.00p 1.49%
BAE Systems (BA.) 664.60p 1.25%
Taylor Wimpey (TW.) 232.50p 1.04%
Persimmon (PSN) 3,285.00p 0.74%
AstraZeneca (AZN) 7,627.00p 0.70%
Centrica (CNA) 78.48p 0.62%
Land Securities Group (LAND) 973.20p 0.58%
United Utilities Group (UU.) 1,052.00p 0.53%
Flutter Entertainment (FLTR) 9,064.00p 0.51%

FTSE 100 - Fallers

Pearson (PSON) 562.00p -3.77%
NMC Health (NMC) 835.20p -2.59%
Evraz (EVR) 378.60p -2.35%
Johnson Matthey (JMAT) 2,721.00p -2.05%
Glencore (GLEN) 224.30p -2.03%
Burberry Group (BRBY) 1,881.50p -2.01%
BHP Group (BHP) 1,649.60p -1.65%
BP (BP.) 458.60p -1.63%
Barclays (BARC) 178.40p -1.61%
Smith & Nephew (SN.) 1,948.50p -1.54%

FTSE 250 - Risers

Daejan Holdings (DJAN) 8,010.00p 54.93%
Hochschild Mining (HOC) 197.40p 4.67%
Finablr (FIN) 78.50p 4.04%
Fresnillo (FRES) 714.20p 3.30%
Spectris (SXS) 3,016.00p 2.97%
Hammerson (HMSO) 232.20p 2.88%
Genus (GNS) 3,306.00p 2.16%
Centamin (DI) (CEY) 152.65p 2.04%
Workspace Group (WKP) 1,283.00p 1.34%
Direct Line Insurance Group (DLG) 340.00p 1.19%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 499.20p -3.14%
Ferrexpo (FXPO) 153.50p -2.69%
Aston Martin Lagonda Global Holdings (AML) 412.00p -2.58%
Vesuvius (VSVS) 443.40p -2.51%
Moneysupermarket.com Group (MONY) 358.80p -2.42%
Weir Group (WEIR) 1,335.00p -2.34%
Cairn Energy (CNE) 170.00p -2.24%
Tullow Oil (TLW) 41.52p -2.17%
Hays (HAS) 158.80p -1.79%
Softcat (SCT) 1,207.00p -1.63%

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