London close: Stocks slip amid coronavirus concerns
London stocks retreated on Tuesday, but finished the session well off their lows, dragged lower by worries about the spread of coronavirus in China and a stronger pound, as solid UK jobs data weakened the case for a rate cut by the Bank of England.
The FTSE 100 was down 0.53% at 7,610.70 as concerns about the coronavirus weighed on risk appetite after China confirmed that it can spread between humans. Adding to the downbeat mood was Moody’s downgrade of Hong Kong’s credit rating to Aa2 from Aa3. The ratings agency also cut its outlook on HK to 'negative' from 'stable' following months of pro-democracy protests.
IG analyst Josh Mahony said: "Global stocks are on the slide, with fear over the impact of the coronavirus that is spreading throughout China. A strong UK jobs report has helped push the pound higher. Meanwhile, plans for a US middle class tax cut is strengthening the case for US outperformance under Trump."
A firmer pound also dented the top-flight index, as around 70% of its constituents derive most of their earnings form overseas. Sterling was up 0.3% against the US dollar to 1.3044 and 0.25% higher versus the euro at 1.1755 after data from the Office for National Statistics showed that the UK employment rate hit another fresh high in the three months to November of 76.3%.
That was an 0.6% improvement on the same period a year earlier and 0.5% higher than the previous quarter. It was the highest since records began in 1971. Unemployment meanwhile held at 3.8%.
The data on wage growth was less impressive, however. Estimated annual growth in average weekly earnings remained at 3.2% for total pay, which includes bonuses, and slowed to 3.4% from 3.5% for regular pay, which excludes one-off payments. Once adjusted for inflation, annual growth in total pay was estimated to be 1.6%, and 1.8% for regular pay.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The continued resilience of the labour market increases the chances that the MPC will take a rain-check next week, instead of cutting Bank Rate immediately.
"The outlook for strong wage gains makes it hard for the MPC to justify cutting Bank Rate now in order to meet its primary objective of ensuring that CPI inflation remains close to its 2% target."
In equity markets, Russian steel maker Evraz was the standout loser, while miners Antofagasta, Rio Tinto, Glencore, BHP and Anglo American all fell amid worries about China.
Burberry was under the cosh, along with the wider European luxury sector, amid fears about the impact of coronavirus. Burberry’s third-quarter trading update was due out the next day.
Neil Wilson, chief market analyst at Markets.com, said: "It’s all about concerns that this virus will hit growth in China and could spread to Hong Kong. Investors worry about Chinese consumer confidence being hit - if we’re talking a SARS-like event then it will keep shoppers in their homes and away from stores. And that is not even considering the impact on tourism, which particularly in the case of HK would be a factor weighing on luxury sales."
Online trading platform IG Group lost ground as it reiterated its medium-term financial targets but posted a drop in interim trading revenue and profit and announced the departure of its chief financial officer.
On the upside, easyJet flew higher as the budget airline bumped up its first-half revenue guidance and said it expects a narrower first-half headline pre-tax loss compared with 2019's £275m.
Dixons Carphone was a high riser as it reported a mixed performance over the festive period, with a rise in electricals revenue but a drop in mobile sales, and said it was on course to deliver on its full-year expectations.
SSP was also up after it reported a 7.5% rise in first-quarter revenue at constant currency and said it was confident of delivering another year of "strong growth".
FTSE 100 - Risers
easyJet (EZJ) 1,517.00p 4.62%
Legal & General Group (LGEN) 307.60p 1.79%
Melrose Industries (MRO) 241.70p 1.60%
Auto Trader Group (AUTO) 591.60p 1.37%
Associated British Foods (ABF) 2,664.00p 1.37%
London Stock Exchange Group (LSE) 7,708.00p 1.10%
Hargreaves Lansdown (HL.) 1,796.00p 1.07%
St James's Place (STJ) 1,120.00p 1.04%
Lloyds Banking Group (LLOY) 58.50p 1.04%
Ashtead Group (AHT) 2,552.00p 0.99%
FTSE 100 - Fallers
Evraz (EVR) 403.00p -5.68%
Informa (INF) 827.00p -3.55%
InterContinental Hotels Group (IHG) 4,965.00p -3.52%
International Consolidated Airlines Group SA (CDI) (IAG) 637.80p -2.95%
Antofagasta (ANTO) 950.00p -2.68%
Imperial Brands (IMB) 1,985.00p -2.62%
Pearson (PSON) 576.00p -2.14%
Anglo American (AAL) 2,200.00p -1.81%
Royal Dutch Shell 'B' (RDSB) 2,214.50p -1.69%
Sainsbury (J) (SBRY) 212.40p -1.67%
FTSE 250 - Risers
Dixons Carphone (DC.) 152.45p 7.02%
Quilter (QLT) 165.50p 6.33%
Avast (AVST) 538.50p 2.96%
Future (FUTR) 1,488.00p 2.90%
SSP Group (SSPG) 682.00p 2.71%
Pets at Home Group (PETS) 286.80p 2.36%
Kainos Group (KNOS) 854.00p 2.15%
Synthomer (SYNT) 329.00p 1.73%
IntegraFin Holding (IHP) 462.50p 1.65%
Trainline (TRN) 479.50p 1.48%
FTSE 250 - Fallers
Finablr (FIN) 131.40p -3.74%
Fidelity China Special Situations (FCSS) 244.00p -3.56%
Wood Group (John) (WG.) 391.30p -3.14%
Kaz Minerals (KAZ) 537.40p -3.14%
Senior (SNR) 164.80p -3.06%
NewRiver REIT (NRR) 188.00p -3.00%
Vesuvius (VSVS) 456.60p -2.81%
SIG (SHI) 95.00p -2.66%
Cranswick (CWK) 3,486.00p -2.52%
Weir Group (WEIR) 1,413.50p -2.52%