London midday: Stocks up amid coronavirus breakthrough hopes

London stocks were in the green but off earlier highs by midday on Wednesday, as traders weighed up reports of a breakthrough in the fight against coronavirus against insistence from the World Health Organisation that there is no known treatment for the deadly outbreak.

The FTSE 100 was up 0.7% at 7,491.50, reversing earlier losses but off the highs reached mid-morning 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, told Sky that he was now at the stage to start testing the vaccine on animals as early as next week, with human studies in the summer if enough funding is secured.

The vaccine will be too late for this current outbreak but it will be crucial if there is another one.

In addition, China Global Television Network cited a report from China's Changjiang daily, which said that researchers at Zhejiang University had conducted tests showing that two drugs - Abidol and Darunavir - can effectively inhibit the virus in vitro cell experiment.

So far, the death toll from the coronavirus outbreak has reached 490, with more than 24,000 confirmed cases globally.

The rally in equity markets lost some steam after a spokesperson for the WHO 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."

FTSE gains were also tempered by a stronger pound, which rose 0.3% against the dollar to 1.3064 and 0.4% versus the euro to 1.1850 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 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.

Survey respondents said the headwind from delayed decision-making had lifted since the general election, helping to deliver a return to business activity growth. This was also reflected in a robust improvement in order intakes, with the rate of new business expansion accelerating to its strongest since June 2018.

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."

In corporate news, 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. In the year to the end of December, 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 also rallied.

Travel-related stocks - which have been hit hard of late on concerns about the impact of the coronavirus - 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.

Market Movers

FTSE 100 (UKX) 7,491.50 0.69%
FTSE 250 (MCX) 21,530.30 0.42%
techMARK (TASX) 4,172.52 0.46%

FTSE 100 - Risers

Smurfit Kappa Group (SKG) 2,918.00p 7.36%
International Consolidated Airlines Group SA (CDI) (IAG) 625.20p 5.18%
Smith (DS) (SMDS) 369.80p 4.94%
Mondi (MNDI) 1,642.50p 4.15%
Barratt Developments (BDEV) 854.40p 4.07%
Informa (INF) 815.80p 3.90%
easyJet (EZJ) 1,533.50p 3.37%
Evraz (EVR) 392.80p 2.91%
Antofagasta (ANTO) 882.80p 2.89%
TUI AG Reg Shs (DI) (TUI) 837.20p 2.85%

FTSE 100 - Fallers

Imperial Brands (IMB) 1,809.20p -7.37%
NMC Health (NMC) 945.80p -5.56%
BT Group (BT.A) 158.86p -2.43%
United Utilities Group (UU.) 982.60p -1.27%
Hargreaves Lansdown (HL.) 1,757.50p -1.15%
Ocado Group (OCDO) 1,230.00p -1.05%
British American Tobacco (BATS) 3,409.50p -1.03%
Polymetal International (POLY) 1,210.50p -0.98%
Ferguson (FERG) 7,306.00p -0.98%
Meggitt (MGGT) 668.40p -0.89%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 316.70p 6.56%
Syncona Limited NPV (SYNC) 229.50p 4.79%
Kaz Minerals (KAZ) 494.00p 4.46%
Premier Oil (PMO) 105.15p 3.95%
Ferrexpo (FXPO) 144.85p 3.06%
Victrex plc (VCT) 2,330.00p 2.82%
Countryside Properties (CSP) 520.50p 2.76%
Grainger (GRI) 305.60p 2.69%
Tullow Oil (TLW) 50.16p 2.68%
Games Workshop Group (GAW) 6,980.00p 2.65%

FTSE 250 - Fallers

Future (FUTR) 1,188.00p -8.47%
Finablr (FIN) 75.15p -4.75%
Ultra Electronics Holdings (ULE) 2,164.00p -2.87%
Vivo Energy (VVO) 108.40p -2.69%
Coats Group (COA) 73.90p -2.25%
NewRiver REIT (NRR) 187.00p -1.99%
TalkTalk Telecom Group (TALK) 119.70p -1.97%
Just Group (JUST) 81.15p -1.76%
Workspace Group (WKP) 1,215.00p -1.70%
Marston's (MARS) 104.40p -1.51%

FTSE 250 - Fallers

Future (FUTR) 1,188.00p -8.47%
Finablr (FIN) 75.15p -4.75%
Ultra Electronics Holdings (ULE) 2,164.00p -2.87%
Vivo Energy (VVO) 108.40p -2.69%
Coats Group (COA) 73.90p -2.25%
NewRiver REIT (NRR) 187.00p -1.99%
TalkTalk Telecom Group (TALK) 119.70p -1.97%
Just Group (JUST) 81.15p -1.76%
Workspace Group (WKP) 1,215.00p -1.70%
Marston's (MARS) 104.40p -1.51%