AB Foods looking to mitigate coronavirus, Bunzl sees decent profit growth

London open

The FTSE 100 is expected to open 117 points lower on Monday, having closed down 0.44% at 7,403.92 on Friday.

Stocks to watch

Primark owner Associated British Foods said it was looking at stepping up production from Asian suppliers to mitigate any longer term impact from the coronavirus in China where it sources a broad assortment of products. “We typically build inventories in advance of Chinese New Year and, as a consequence, are well stocked with cover for several months and do not expect any short-term impact. We are working closely with our suppliers in China to assess the impact on their factories and supply chains and their ability to fulfil our current orders,” the company said on Monday in a trading update. Sales at Primark are expected to be 4.2% ahead of last year in the first half at constant currency and 2.5% ahead at actual exchange rates, driven by increased retail selling space and level like-for-like sales, ABF added.

Bunzl reported a 1% improvement in its revenue at constant exchange rates in its final results on Monday, to £9.33bn, or 2.7% growth at actual exchange rates. The FTSE 100 distribution and services provider said its operating margin rose to 6.8% from 6.7% at constant exchange rates on a consistent IAS 17 basis for the year ended 31 December, and was unchanged at actual exchange rates. It said its adjusted profit before income tax was 2.4% higher at constant exchange rates on a consistent IAS 17 basis at £578.2m, and up 3.6% at actual exchange rates.

Newspaper round-up

Boris Johnson is planning to ramp up government borrowing to spend more than £1tn a year, increasing the size of the British state to make it bigger than at any point under the 10-year premiership of Labour’s Tony Blair. Analysis from The Resolution Foundation predicts government spending will rise above the £1tn mark for the first time in history by 2023-24. The report, published on Monday, comes as the chancellor, Rishi Sunak, prepares to deliver what is widely expected to be one of the most expansionary Conservative budgets in a generation. – Guardian

Environmental groups have called into question the Bank of England’s commitment to tackling the climate emergency while it retains one of Britain’s most senior oil company executives on its governing board. Greenpeace joined with Friends of the Earth and the campaign group Oil Change International (OCI) to condemn the role played on the Bank’s board of directors by Dorothy Thompson, the executive chair of Britain’s largest independent oil company, Tullow Oil. – Guardian

The world's "fragile" economic recovery could be derailed by the deadly Covid-19 outbreak, the head of the IMF has warned, as traders brace for a tumultuous week amid signs the virus is spreading rapidly outside China. Kristalina Georgieva, IMF managing director, said the coronavirus has “disrupted economic activity in China and could put the recovery at risk”, urging finance ministers to put “the global economy on a more sound footing”. – Telegraph

The boss of the company that owns Britain’s largest train factory has said that winning the £2.75 billion contract to build trains for HS2 is “vital” for its future. Danny Di Perna, global president of Bombardier Transportation, told The Times that he believed the Litchurch Lane factory in Derby would be around “for another century” despite a takeover by the company’s French rival Alstom, but emphasised the importance of the HS2 contract. – The Times

A low-cost hotel operator is planning to debut on London’s junior stock market next month in what will be the biggest AIM listing of the year so far. Meininger Hotels will launch a £330 million initial public offering towards the end of March as it prepares to triple the size of its portfolio over the next five years to about 50,000 beds across Europe. – The Times

US close

US stocks closed sharply lower on Friday as new cases of the Wuhan coronavirus accelerated overnight, adding to fears that a pronounced global economic slowdown was on the horizon.

At the close, the Dow Jones Industrial Average was down 0.78% at 28,992.41, while the S&P 500 was 1.05% weaker at 3,337.75 and the Nasdaq Composite saw out the session 1.79% softer at 9,576.59.

The Dow closed 227.57 points lower on Friday, following on from losses seen in the previous session as indices dropped from the record highs seen a day earlier.

China's National Health Commission reported overnight that total confirmed cases of the virus had hit 75,465 on the mainland, leading to a total of 2,236 deaths. Over 800 new cases were reported, with South Korea announcing 52 new cases, taking its total to 150.

The outbreak has already hit US companies exposed to China, such as Apple, while new data from the China Passenger Car Association revealed that automotive sales had plummeted 92% in the first two weeks of February.