• FTSE 100 index closes 52 points higher
  • TUI leads the charge
  • Coronavirus fears take a back-seat

5.20pm: FTSE 100 finishes up

FTSE 100 index closed Tuesday in the green as the markets perceive the threat of the coronavirus easing.

The UK index of leading shares closed the day up over 52 points, or 0.71%,  at 7,499, while the more domestic-focused index, the FTSE 250, added over 152 points.

On Wall Street, US stocks were also heading north, ahead of Federal Reserve chairman Jerome Powell speaking before the House Committee on financial services.

On Wall Street, the Dow Jones Industrial Average added over 33 points at 29,308. The S&P 500 went over 12 points higher, while the tech heavy Nasdaq gained over 55 points. The latter two benchmarks reaching new record highs.

“US equity markets didn’t suffer that badly during the height of the coronavirus-related selling so now they are outperforming seeing as some of the fears have subsided,” said David Madden, analyst at CMC Markets in London.

“The number of confirmed coronavirus infections in China is on the rise, but the growth rate seems to be cooling, hence why dealers are less worried about the situation. China’s Xi Jinping claimed the state’s actions to get the crisis under control are working,” he added

4.00pm: London’s leading shares cement gains

Entering the last half-hour of trading in London, the FTSE 100 was up 65 points at 7,511.

Package tour operator TUI AG (LON:TUI) led the advance after its first-quarter results topped expectations; the shares rose 12% to 960.2p.

“Europe maintained its arbitrary optimism throughout the session, joined in its gains by the Dow Jones,” commented a sceptical Connor Campbell at Spreadex.

“Like pretty much every day since the coronavirus became a major market concern, Tuesday has seen just as much debatable ‘good’ news for investors to glom onto as unquestionable bad news for them to try and ignore. After all, the morning’s headlines were full of fears that the illness could come to infect 60% of the global population, with the total death toll crossing 1000.

“Nevertheless, investors’ appetite to keep buying – alongside the hopes that the world’s central banks are prepared to step in to dull the impact of the outbreak – produced another strong rebound for the European indices,” he reported.

2.50pm: The Footsie takes a snooze

US indices have opened on the front foot, with gains pretty much as predicted by the spread-betting community.

The Dow Jones was up 85 points (0.3%) at 29,361 and the S&P 500 was 13 points (0.4%) higher at 3,365.

In the UK, the Footsie is having its traditional afternoon nap. It is up 58 points (0.8%) at 7,505.

London’s top performer is TomCo Energy plc (LON:TOM), which has added 0.25p (at 1.425p) to the gains it racked up yesterday when it emerged that Sebastian Marr has accumulated a 5.6% stake.

Recruitment consultancy Nakama Group plc (LON:NAK) is London’s second-biggest faller after a trading update in which it said trading to date in the year to the end of March has been “broadly in line” with management’s expectations.

No company uses the phrase “broadly in line” when performance has exceeded expectations and the shares duly tanked 32% after the company said it had faced a number of challenges in 2020, including the impact of the coronavirus.

1.40pm: US indices to open higher

US markets are expected to open higher, as investors take heart from an apparent slowdown in the spread of the coronavirus in China.

Spread betting quotes point to the Dow Jones opening 115 points higher at 29,391 and the S&P 500 12 points firmer at 3,364.

China’s National Health Commission said that 108 deaths related to the virus were reported in the last 24 hours, taking the death toll in the People’s Republic to 1,018.

It’s the first time the number of reported deaths in a single day has exceeded 100. The commission also reported 2,4789 new confirmed cases of the illness, bringing the number of sufferers up to 42,638.

As millions of Chinese workers return to the nine-to-five grind following the extended Lunar New Year holiday, the authorities in Beijing have said that the reopening of businesses should not be hampered by “crude and oversimplified” restrictions.

President Trump, who admittedly is not noted for his medical knowledge, told reporters that the virus would go away in April.

He relayed details of a conversation he had had with China’s President Xi over the weekend. “During the month of April, the heat, generally speaking, kills this type of virus,” President Trump said.

For the hard of thinking, he added: “That would be a good thing”.

Meanwhile, in the UK, the FTSE 100 has poodled along on or around the 7,500 level throughout the afternoon and is currently at 7,501, up 54 points (0.7%).

Full-year results from Ocado Group PLC (LON:OCDO) got the thumbs-up, with the shares up 24.5p at 1,241.5p.

Richard Hunter, the head of markets at interactive investor, said Ocado has been a “jam tomorrow” stock for some considerable time, with the shares rising 381% over the last three years.

“In this period, the Andover fire was a challenge which for the most part Ocado managed to overcome. It seems that the costs will be recouped via insurance, but there was inevitably a disruption to the business which cannot be recovered. Against this backdrop, the 10.3% growth in retail revenue is a commendable achievement, while group revenues rising 10% also represents a healthy clip,” Hunter said.

“Running costs also showed a significant increase as the business expands, and the widening overall loss for the group has done little to assuage the company’s appetite for further expansion, with £600 million of total capital expenditure expected, adding to a figure which had already spiked 22% year on year. It appears that extra attention (and therefore cost) will also be applied to the openings of the customer fulfilment centres in Canada and France in an effort to anticipate teething problems for roll-outs in the future,” Hunter added.

Joe Healey, an investment research analyst at The Share Centre, was a bit more happy-clappy over the results, saying “they were a bright spark in the maligned grocery sector, with Ocado claiming the title of fastest-growing UK grocer”.

“While these results were always going to show some effects of drag from investment and the knock-on impact of the Andover fire, what investors will be most interested in is the underlying performance of its Retail and UK Solutions & Logistics segments which both posted double-digit EBITDA growth,” Healey said.

“It’s clear Ocado is operating in a secular niche and is providing a leadership role in the evolution of the grocery retailing market, but it is still too early to say whether they have pushed too hard too soon; however with growth starting to develop well in domestic markets, this should provide investors with some optimism. The crucial factor will be how international consumers respond to their service once operational which we should begin to see in H2,” he added.

12.20pm: Link is just not Intu it …

The National Federation of Independent Business (NFIB) Small Business Survey index for January rose to 104.3 from 102.7 in December.

The consensus forecast was for an index reading of 103.5.

“The headline index is sensitive to movements in the stock market, with short lag, and was boosted by rebounds in the sales expectations, good-time-to-expand and jobs-hard-to-fill components,” said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

“Overall, the NFIB labour data signal that the labour demand remains solid, while compensation plans are only just shy of the cycle high. The key new labour information today is the one-point increase in the proportion of NFIB firms citing rising labour costs as their biggest problem. This measure dropped unexpectedly by three points in December and we were expecting a bigger rebound in January,” Shepherdson revealed.

“It matters because it has been the most accurate survey-based leading indicator of wage gains in this cycle, signalling shifts in the official data about a year in advance. At the peak, in November, it suggested wage growth would rise to about 5% a year from now; now it signals 3-3/4% but the index is volatile, and we think it is likely to rise further over the next few months,” Shepherdson predicted.

The FTSE 100 was up 63 points (0.9%) at 7,509 and is faring better than the mid-cap FTSE 250, which is up 100 points (0.5%) at 21,593, led by bookmaker William Hill PLC (LON:WMG), which is up 5.4% after it announced a partnership with CBS Sports.

The days of Intu Properties PLC‘s (LON:INTU) membership of the FTSE 250 are in the past – it fell out late last year – and the chances of its returning are diminishing based on latest developments.

The highly-geared property firm desperately needs to reduce its debt levels and yesterday it was buoyed by reports that Hong Kong property group Link REIT was prepared to back a big cash call; the shares slumped 27% to 12.63p after the company confirmed that Link had pulled out of talks to invest in Intu.

11.30am: NMC Health falls out of bed again

Blue-chips in the red may sound incongruous but the fact is that there aren’t many around this morning.

The FTSE 100 was up 60 points (0.8%) at 7,507, with just nine index constituents in the red, chief among them being NMC Health PLC (LON:NMC), the Middle Eastern hospitals operator that has been the cause of search queries for the phrase “Fred Karno’s army” going through the roof.

The shares are off 14% today as City pundits pile into the company’s corporate governance after the company admitted yesterday that its shareholder register might be wrong.

Around 20mln NMC shares ostensibly held by its founder and co-chairman B R Shetty may, in fact, be owned by two of his business partners.

On the macroeconomic front, economists are still picking the bones out of this morning’s deeply unexciting UK gross domestic product (GDP) release.

“The economy stagnated in the fourth quarter of 2019 as it struggled in the face of particularly heightened domestic political and Brexit uncertainties; however, upward revisions to GDP earlier in the year meant that it grew 1.4% in 2019, which was up from 1.3% in 2018,” summarised Howard Archer, the chief economic advisor to the EY ITEM Club.

“The economy saw decent growth in December itself as GDP rose 0.3% month-on-month with indications that it had a better second half of the month after the decisive General Election result diluted some of the uncertainties it faced; however, this only offset the 0.3% month-on-month GDP contraction suffered in November. GDP had earlier risen 0.2% month-on-month in October,” Archer reported.

“Business and consumer confidence have clearly improved early on in the first quarter of 2020, and the overall impression is that this has led to some improvement in economic activity; however, with little hard data available so far, it is hard to judge just how much the economy is picking up and whether this can be sustained,” Archer said.

10.00am: GDP flat in the fourth quarter

UK gross domestic product (GDP) in volume terms was flat in the fourth quarter of 2019, the Office for National Statistics (ONS) reported.

Growth in the third quarter was revised to 0.5%.

When compared with the same quarter a year ago, UK GDP increased by 1.1%; down from a revised 1.2% in the previous period.

Services and construction contributed positively to growth in the output approach to GDP while production output contributed negatively to growth, the ONS said.

“The UK economy failed to grow in the fourth quarter, but this is ‘old news’ for markets. Optimism has increased among businesses, and while this may not fully translate into faster growth, we think it would take a more material deterioration in UK activity to convince the Bank of England to cut interest rates,” said ING’s developed markets economist, James Smith.

“The question now is whether this improved sentiment will filter into the dataflow. It is possible that we see an improvement in consumer spending this year, given that wage growth has been strong at a time where household energy costs are set to drag inflation lower. That said, the global coronavirus outbreak is a clear risk to spending over the next few months were it to spread more widely.

“However, we remain sceptical that investment will see a dramatic revival. Whether a free-trade agreement is signed this year or not, there’s likely to be a wave of new friction for traders at the start of 2021. While it is uncertain how firms will react to this step-change, it is unlikely to translate into longer-term investment. Onshoring of production is likely to be viewed as more of a cost for firms (to mitigate disruption to just-in-time supply chains), and will ultimately draw resources away from other potential projects.

“The bottom line is that we aren’t expecting economic growth to speed up dramatically this year; however, it is important to remember that the Bank of England isn’t either,” Smith said.

9.30am: Up, up and away!

The London stock market was in a holiday mood on Tuesday, with travel stocks leading the Footsie to within spitting distance of 7,500.

The FTSE 100 index was up 50 points (0.7%) at 7,497.

Investors got on board the TUI AG (LON:TUI) bandwagon after the travel firm posted better-than-expected fiscal first-quarter numbers.

TUI shares were up 12% to 960.8p and dragged airline stocks easyJet PLC (LON:EZJ) and British Airways owner International Consolidated Airlines (LON:IAG) higher too; the former was up 3% and the later was 2.3% higher.

“Given the backdrop of travel fears around the coronavirus and pictures of an infected cruise ship all over the news, TUI’s positive news has taken the market by surprise,” declared Russ Mould, the investment director at AJ Bell.

“Booking trends improved in the first quarter of its financial year, its Markets & Airlines business is doing particularly well, it is finding ways to deal with cost pressures, and it expects compensation from Boeing.

“This is a solid update and one certainly helped by the demise of former rival Thomas Cook which has enabled TUI and others to increase market share; however, the message may not be the same in three months’ time if the coronavirus isn’t contained,” he warned.

Also going well early doors was JD Sports Fashion PLC (LON:JD.) after the Competition Markets Authority (CMA) provisionally decided the sportswear retailer’s proposed acquisition of rival Footasylum would be bad for competition.

Regulators are also worried that the merger will see fewer discounts for shoppers due to a smaller choice of outlets both online and on the high street.

The CMA concluded that blocking the merger “may be the only way of addressing these competition concerns”.

JD Sports, up 2.7%, disagreed but the market seems to think the decision may be a blessing in disguise.

8.30am: Positive start

The FTSE 100 shrugged off coronavirus fears and took its cue from Wall Street as it opened firmly in positive territory on Tuesday.

London’s blue-chip index advanced 77 points early on to 7,520.49

Asian markets too appeared to now have largely factored in the economic impact of the outbreak with Hong Kong’s Hang Seng leading the pack with a 1.5% advance.

Sentiment in the Square Mile may be dictated later by the outperformance or underperformance of the UK economy in the final quarter.

Economists are expecting a flat GDP reading for the three months ended December 31, giving a modest 0.8% advance for 2019 as a whole.

The stand-out riser, up 11% in early trade, was the Anglo-German travel giant TUI (LON:TUI), which appears to have overcome problems with its 737 Max jetliners to post a better than expected trading update.

AIM’s biggest company, the fashion website Boohoo.com (LON:BOO) advanced 3% after an upgrade to ‘overweight’ by Barclays.

Proactive news headlines:

Researchers in Western Australia using the Parsortix liquid biopsy system have found another use for the ANGLE PLC (LON:AGL) cancer detection device. A team at Edith Cowan University in Perth deployed the technology to monitor people with melanoma and were able to sort them into high risk and low-risk groups.

S & U PLC (LON:SUS), the specialist motor finance and property bridging lender has said performance in the financial year just ended was in line with expectations. The company noted that trading since its last update, just before the General Election, has seen an improvement in transactions in both parts of its business (motor finance and bridging loans). The used car market in which Advantage exclusively operates remains in robust health, S & U said.

Supermarket Income REIT plc (LON:SUPR) has confirmed it is in talks with a large institutional investor to acquire a minority stake in a portfolio of 26 supermarkets let to Sainsbury’s. Terms have not been agreed and a deal might not be concluded added the trust.

Advanced Oncotherapy PLC (LON:AVO) said it has selected The London Clinic to staff and run a second state-of-the-art proton beam facility. The two companies have signed an outline deal called a memorandum of understanding under which AVO will lease part of The London Clinic’s premises to install the treatment room. A profit-sharing agreement has been put in place, although full commercial details were not revealed.

Ali Mortazavi, the former chief executive of Silence Therapeutics, is to take over at e-Therapeutics PLC (LON:ETX) as executive chairman following wholesale board changes, with the firm also launching a £1.6mln refinancing. Current e-Therapeutics chairman Iain Ross is standing down, alongside chief executive Ray Barlow and chief financial officer Steve Medlicott. The placing will be at 3p per share, a 24% discount to last night’s close.

Gaming Realms PLC (LON:GMR) has predicted that revenues for its current year will be “mostly ahead” of its expectations, as it also revealed that its chief executive will be stepping down with immediate effect. The developer of mobile gambling games said its performance had been driven by its content licensing business, which had added eight new agreements during the year, while the improved revenues and cost control meant it now expects to report an adjusted (EBITDA) loss for the year of £500,000.

OPG Power Ventures PLC (LONOPG) has boasted “another strong operational performance” as it updated investors on trading across the first nine months of its financial year. In a stock market statement, the Indian power firm said it generated some 2.09bn units of total generation in the period ended 31 December, compared to 2.15bn in the same period a year earlier.

Alien Metals Ltd (LON:UFO) has now commissioned its IP survey at the Donovan 2 copper-gold project in Mexico. The purpose of the survey is to generate high-priority drill targets, and the results are expected during the current quarter.

Walls & Futures REIT PLC (LON:WAFR), the ethical housing investor and developer, saw its net asset value (NAV) per share surge by 15% last year. The real estate investment trust (REIT) said that following completion of its Didcot property in December 2019, and the annual valuation of the company’s residential property portfolio, the NAV per share was 106p, up from 92p a year earlier.

Anglo Pacific Group PLC (LON:APF) (TSX:APY) said it has agreed to provide a six-month extension to the warrants previously granted to Investec Bank PLC on 10 February 2017 which were due to expire on 10 February 2020. It added the extension was granted as a result of the holder being restricted from exercising its warrants for a period of time over the past twelve months, as a result of being in possession of inside information in relation to potential transactions being contemplated by the company. The group said there are no changes to the term of the warrants and as such the 294,695 warrants are exercisable at a subscription price of 158.00p until 10 August 2020.

Diversified Gas and Oil PLC (LON:DGOC), the U.S. based owner and operator of natural gas, natural gas liquids, and oil wells and midstream assets, said its senior management will participate in the Credit Suisse 25th Annual Energy Summit on Tuesday, 3 March 2020, to be held at the Grand Hyatt Vail in Vail, Colorado.

FastForward Innovations Ltd (LON:FFWD), the AIM-quoted company focused on investing in fast-growing, industry-leading businesses, said it has prepared an updated Key Information Document which can now be viewed on FastForward’s website via the following link: http://bit.ly/37gpFLv

6.20am: Rebound predicted 

The FTSE 100 is expected to rebound on Tuesday after Wall Street provided some positive impetus overnight. 

London’s blue-chip index was being called 48 points higher to 7,496 after closing almost 20 points lower at the start of the week. 

US stock indices had a positive session, with the Dow Jones adding 174 points or 0.6% to finish at 29,276.82. The broader S&P 500 closed 0.7% higher and the tech-heavy Nasdaq Composite ended up 1.1%.

“US equities flirted with fresh record highs on better-than-expected fourth-quarter earnings, and the reassurance that the Federal Reserve is determined to cover their back, come trade war or coronavirus,” said Ipek Ozkardeskaya, market analyst at Swissquote Bank.

She said investors will be keeping an ear out for speeches from European Central Bank president Christine Lagarde and Bank of England governor Mark Carney’s speeches today. 

Federal Reserve chair Jerome Powell will also start his two-day testimony before the Senate. 

“Powell will likely mention the increased risks to the economy due to the coronavirus outbreak, but he will probably not make it the focal point of his monetary strategy,” Ozkardeskaya said. 

“We expect Jay Powell to reiterate his wait-and-see position for the coming months. With strong jobs data and sky-high stock prices, there is no pressure to change a winning team.”

Closer to home there will be a mass of data delivered by the Office for National Statistics as part of its quarterly report on UK gross domestic product. 

Analysts at RBC Capital Markets described it as “very close” to “irrelevant” as it covers the period mostly before the general election.

Also scheduled for later are Ocado PLC’s (LON:OCDO) preliminary results that should show how well the FTSE 100-listed online grocery retailer is doing as it turns into an international player, with the focus will be on the Solutions division, where retailers pay to use its robot-operated warehouses and delivery systems.

In November it signed a deal with Japan’s Aeon, which bodes well for the distant future but upped operating costs for 2019 by £25mln.

There should also be a first-quarter trading update from TUI AG (LON:TUI), coming hot on the heels of the travel group’s spin-off of its German cruises arm.

On the downside, the downing of the Boeing 737 Max will bring cost headwinds and there is not expected to be the same hedging positives enjoyed this time last year.

Analysts at UBS forecast a group an underlying loss (EBITA) of €107m versus a loss of €83mln at this time last year.

Around the markets:

  • Pound: flat at US$1.2912
  • Gold: up 0.4% at US$1574.05
  • Oil: Brent crude up 1.5% at US$54.05

Significant announcements on Tuesday:

Finals: Idox Group PLC (LON:IDOX), Ocado PLC (LON:OCDO), PJSC Polyus (LON:PLZL)

InterimsDiurnal Group PLC (LON:DNL)

Trading updatesAA PLC (LON:AA.), S&U PLC (LON:SUS), TUI AG (LON:TUI),

AGMs: BMO Capital & Income Investment Trust (LON:BCI), Keystone Investment Trust (LON:KIT), TUI AG (LON:TUI)

Economic data: UK GDP, UK industrial production, UK BRC retail sales, US NFIB smaller businesses confidence survey, US JOLTS job openings

City headlines:

Financial Times

  • Said Javid will push for ‘permanent equivalence’ for the City of London after Brexit, looking to secure decades-long access for financial services to the EU market.
  • Prepare for Brexit trade costs and red tape, says Michael Gove, serving a “big dose of realism” to the freight industry as he admitted there will be no ‘smart’ border until 2025.
  • HS2 Ltd, the company formed to deliver the high-speed north-south rail link, will be broken up in an attempt to win over critics when the prime minister finally gives the go-ahead to the controversial infrastructure project. 

The Times

  • The property industry is facing an audit-style shake-up by its regulator after scrutiny of potential conflicts of interest at the biggest advisory firms.
  • The City regulator is looking into complex director share pledges at NMC Health after the company revealed that it was not clear who actually controls its biggest shareholdings.
  • Discounting after the festive season helped the retail sector post flat sales on a like-for-like basis in January, according to the latest monthly survey by the British Retail Consortium and KPMG.

Guardian

  • The coronavirus epidemic could spread to about two-thirds of the world’s population if it cannot be controlled, according to Hong Kong’s leading public health epidemiologist.
  • The UK’s water regulator is to face scrutiny from the competition watchdog after setting the water industry’s strictest price controls, with Yorkshire Water the first large water company to challenge Ofwat’s industry price review.
  • The coronavirus crisis will slash global smartphone production in the first quarter, according to new industry forecasts.
  • Boris Johnson will promise an additional £5bn investment in buses and cycle routes to head off critics who fear the troubled HS2 rail line will suck cash from other travel priorities.

Telegraph

Millions of savers could lose hundreds of thousands of pounds in potential pensions savings if proposed changes to pension tax relief, which could be announced at the Budget, comes into force.