London close: Stocks end higher amid hopes for coronavirus vaccine

London stocks finished higher on Wednesday as traders weighed up reports of a breakthrough in developing a vaccine for the new coronavirus against the cold truth that, at least for the moment, there was no known treatment for the potentially fatal illness.

The FTSE 100 was up 0.59% at 7,483.96 after Sky News reported that the scientist leading the UK’s research into a coronavirus vaccine said the team had made a significant breakthrough by reducing a part of the normal development time from "two to three years to just 14 days".

Professor Robin Shattock, head of mucosal infection and immunity at Imperial College London, said he was ready to start testing the vaccine on animals as soon as the next week, with human studies to follow in the summer if enough funding was secured.

But shortly before noon, gains in equities lost some steam after a spokesperson for the World Health Organization told Reuters: "There are no known effective therapeutics.”

Neil Wilson, chief market analyst at Markets.com, said: "Investors are keen to latch on to any good news and finding an excuse to buy into a good news recovery story. But they'll be just as sensitive to bad news stories - we're only a handful of London cases away from the FTSE taking a dive.

"Until we know the full extent of this outbreak and it is demonstrably under control there is going to be nervousness."

Indeed, some market commentary was highlighting that the effectiveness of Chinese officials' measures to contain the coronavirus would be known in roughly two days' time, given the virus's 14-day incubation period and that the first reported case happened on 23 January.

Gains on the top flight index were also tempered by a stronger pound, which rose 0.22% against the US dollar to 1.3003 and 0.13% versus the euro to 1.1813 after a survey showed that an election bounce saw activity in the UK services sector improve more than initially estimated in January, to its best level since September 2018.

The IHS/Markit CIPS services sector purchasing managers’ index rose to 53.9 from 50.0 in December, coming in above the initial estimate and consensus expectations of 52.9 and marking the highest level for 16 months.

Tim Moore, economics associated director at IHS Markit, said: "January's PMI surveys give a clear signal that the UK economy has picked up since the general election, as a diminishing headwind from political uncertainty translated into rising business and consumer spending. We maintain our nowcast of UK GDP rising by approximately 0.2% in the first quarter of 2020, which represents an improvement on the sluggish conditions seen at the end of last year.

"A solid return to growth in the service sector was the main factor behind the recovery in the UK economy, with survey respondents commenting that a rebound in sales enquiries had quickly translated into rising workloads so far this year."

Meantime in the States, investors were mulling the possible implications of Democratic party presidential contender, Bernie Sanders's strong showing in the Iowa caucus.

Corrugated packaging group Smurfit Kappa was the standout gainer after it reported a rise in full-year core earnings and revenue as it benefited from its capital spend programme and recent acquisitions. Earnings before interest, tax, depreciation and amortisation rose 7% to €1.65bn while revenue ticked up more than 1% to €9.05bn. Smurfit hiked its final dividend by 12% to 80.9 cent per share.

Peers DS Smith and Mondi rallied alongside.

Travel-related stocks - which have been hit hard of late on concerns about the impact of the coronavirus - also gained, with IAG, easyJet and TUI all higher.

Elsewhere, Barratt Developments advanced as the housebuilder announced a further extension to its capital return programme and reported a rise in first-half profit and revenue amid its highest home completions in 12 years.

Domino’s Pizza was in the green as it said fourth-quarter system sales rose 3.7% but warned that it expects to report an operating loss of about £20m for its directly-operated international markets, which include countries such as Norway, Sweden and Switzerland.

Antofagasta was boosted by an upgrade to ‘hold’ at Deutsche Bank, while Kaz Minerals was underpinned by an upgrade to ‘buy’.

On the downside, Imperial Brands was under the cosh after it issued a profits warning as a worldwide crackdown on vaping products takes effect.

GlaxoSmithKline was also lower in the wake of its fourth quarter numbers, although the drug giant's shares remained near a two-decade high.

Market Movers

FTSE 100 (UKX) 7,482.48 0.57%
FTSE 250 (MCX) 21,520.00 0.37%
techMARK (TASX) 4,139.42 -0.34%

FTSE 100 - Risers

Smurfit Kappa Group (SKG) 2,900.00p 6.70%
Smith (DS) (SMDS) 374.00p 6.13%
Mondi (MNDI) 1,657.50p 5.10%
Informa (INF) 820.40p 4.43%
International Consolidated Airlines Group SA (CDI) (IAG) 617.20p 3.84%
easyJet (EZJ) 1,536.50p 3.57%
Evraz (EVR) 394.10p 3.25%
Melrose Industries (MRO) 248.30p 2.90%
TUI AG Reg Shs (DI) (TUI) 837.40p 2.87%
Antofagasta (ANTO) 885.40p 2.77%

FTSE 100 - Fallers

Imperial Brands (IMB) 1,821.60p -6.74%
GlaxoSmithKline (GSK) 1,739.60p -4.15%
NMC Health (NMC) 970.00p -3.15%
Vodafone Group (VOD) 146.98p -2.82%
BT Group (BT.A) 158.30p -2.78%
Ocado Group (OCDO) 1,221.50p -1.73%
Next (NXT) 6,884.00p -1.58%
Auto Trader Group (AUTO) 582.00p -1.56%
Meggitt (MGGT) 665.40p -1.33%
Hargreaves Lansdown (HL.) 1,755.50p -1.27%

FTSE 250 - Risers

Syncona Limited NPV (SYNC) 229.50p 4.79%
Tullow Oil (TLW) 51.12p 4.65%
Domino's Pizza Group (DOM) 310.00p 4.31%
Premier Oil (PMO) 105.40p 4.20%
RHI Magnesita N.V. (DI) (RHIM) 3,380.00p 3.74%
Kaz Minerals (KAZ) 490.60p 3.74%
Games Workshop Group (GAW) 7,050.00p 3.68%
Ferrexpo (FXPO) 145.55p 3.56%
Victrex plc (VCT) 2,346.00p 3.53%
Apax Global Alpha Limited (APAX) 176.00p 3.51%

FTSE 250 - Fallers

Future (FUTR) 1,188.00p -8.47%
Finablr (FIN) 72.70p -7.86%
Coats Group (COA) 72.65p -3.90%
International Public Partnerships Ltd. (INPP) 161.00p -3.71%
Ultra Electronics Holdings (ULE) 2,162.00p -2.96%
Babcock International Group (BAB) 585.20p -2.89%
Jupiter Fund Management (JUP) 385.10p -2.68%
CLS Holdings (CLI) 280.00p -2.66%
Sanne Group (SNN) 591.00p -2.48%
OneSavings Bank (OSB) 425.60p -2.43%