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London close: Stocks dip as economic data reveals hit from coronavirus

By Alexander Bueso

Date: Friday 21 Feb 2020

London close: Stocks dip as economic data reveals hit from coronavirus

(Sharecast News) - Stocks finished the week on a down note following another bout of selling on Wall Street late in the London session after a closely watched survey of economic conditions in the States fell sharply, pointing to a drop in activity for just the second time since the Great Financial Crisis.

Investors had already been rattled earlier following news of another increase in coronavirus cases in South Korea and by 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, although WHO chief Tedros Adhanom said that while the trend was "encouraging" this "is no time for complacency."

Indeed, Chinese officials later reportedly revised figures for the province of Hubei - the epicentre of the outbreak - higher.

Against that backdrop, by the end of trading, the FTSE 100 was 0.44% lower to 7,403.92.

On home shores, IHS Markit's UK 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%, according to analysts.

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.

Over in the States meanwhile, a composite output gauge for manufacturing and services from the same survey compiler fell from 53.3 for January to 49.6 in February, missing forecasts for a reading of 51.5.

Although analysts at Capital Economics said they had a "hard time believing the apparent message from the Markit PMI that the economy is on the brink of a recession" other data points published overnight made for grim reading, even if only for the very near term.

In Japan, au Jibun Bank's services sector Purchasing Managers' Index for February fell to 46.5 after a reading of 51.0 for January.

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.

And 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%.

On the corporate side of things, 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 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) 7,403.92 -0.44%
FTSE 250 (MCX) 21,780.20 -0.40%
techMARK (TASX) 4,179.81 0.33%

FTSE 100 - Risers

Polymetal International (POLY) 1,344.00p 2.95%
Berkeley Group Holdings (The) (BKG) 5,470.00p 2.20%
BAE Systems (BA.) 666.80p 1.92%
Centrica (CNA) 79.38p 1.77%
AstraZeneca (AZN) 7,690.00p 1.53%
JD Sports Fashion (JD.) 878.80p 1.31%
Mondi (MNDI) 1,705.00p 1.21%
Imperial Brands (IMB) 1,729.00p 1.17%
United Utilities Group (UU.) 1,063.50p 1.10%
Bunzl (BNZL) 1,948.50p 1.09%

FTSE 100 - Fallers

Pearson (PSON) 561.40p -3.87%
Rolls-Royce Holdings (RR.) 648.20p -2.86%
Smith & Nephew (SN.) 1,924.00p -2.78%
BP (BP.) 453.55p -2.71%
Burberry Group (BRBY) 1,870.50p -2.58%
Johnson Matthey (JMAT) 2,709.00p -2.48%
Aveva Group (AVV) 4,870.00p -2.44%
Lloyds Banking Group (LLOY) 55.35p -2.12%
M&G (MNG) 244.60p -2.08%
Royal Dutch Shell 'A' (RDSA) 1,882.80p -2.02%

FTSE 250 - Risers

Daejan Holdings (DJAN) 8,020.00p 55.13%
Hochschild Mining (HOC) 201.00p 6.57%
Fisher (James) & Sons (FSJ) 1,974.00p 4.67%
Syncona Limited NPV (SYNC) 264.00p 3.53%
Fresnillo (FRES) 712.20p 3.01%
Spectris (SXS) 3,005.00p 2.59%
Galliford Try (GFRD) 175.50p 2.54%
Centamin (DI) (CEY) 153.15p 2.37%
Barr (A.G.) (BAG) 604.00p 2.37%
Countryside Properties (CSP) 540.50p 2.17%

FTSE 250 - Fallers

Finablr (FIN) 71.45p -5.90%
Aston Martin Lagonda Global Holdings (AML) 401.60p -5.04%
Tullow Oil (TLW) 40.57p -4.41% Group (MONY) 352.00p -4.27%
Kaz Minerals (KAZ) 493.40p -4.27%
Cineworld Group (CINE) 181.70p -4.12%
IP Group (IPO) 75.70p -3.57%
Cairn Energy (CNE) 167.70p -3.57%
Premier Oil (PMO) 102.70p -3.52%
Elementis (ELM) 122.60p -3.40%


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