• FTSE 100  closes down 82 points
  • UK Chancellor Sajid Javid departs
  • Haynes Publishing motors higher after agreed bid

5pm: FTSE 100 closes lower

FTSE 100 index finished in the drink on Thursday, as the pound strengthened, coronavirus fears deepened, and UK Chancellor Sajid Javid resigned four weeks ahead of the Budget.

Britain’s blue chip benchmark ended the day around 82 points lower at 7,452.

Sterling gained about 0.70% against the US dollar at US$1.3049  as the currency firmed on talk of a bolder fiscal stance from Javid’s successor,  a former junior housing minister Rishi Sunak.

Javid reportedly quit in the middle of a cabinet reshuffle, having rejected PM Johnson’s order to  sack his team of aides.

“The pound has enjoyed a huge rise today despite a cabinet reshuffle that ultimately saw a shock resignation of the chancellor with less than a month until he delivers his first budget,” said  Joshua Mahony, the senior market analyst at IG.

The analyst notes that Sunak comes from a banking and hedge fund background, prompting many to believe he is a more pro-business chancellor that will favour lower business taxes.

“Javid had convinced Boris Johnson to adopt a commitment to balance the budget by 2022/23, yet with him gone we are now looking at a more expansionary fiscal stance to boost the economy through the current economic uncertainty,” Mahony suggested.

Top loser on Footsie, and by some margin, was utility Centrica (LON:CNA), which tanked 15% to 71.82p.

In its full year update, the British Gas owner reported a pre-tax loss of £1.1 billion, blaming the energy price cap and falling gas prices

British Gas saw its client base fall by 286,000 as it continues to lose customers to smaller, more nimble firms.

3.30pm: Half-hearted rally quickly fizzles out

A late half-hearted rally by London’s benchmark index appears to have run out of steam.

The FTSE 100 was down 117 points at 7,416.

Away from the blue-chips, investors cheered Domino’s Pizza Group PLC (LON:DOM) to cut bait on its Norwegian venture.

The pizza delivery franchises operator has agreed to sell its entire shareholding in DP Norway AS to Pizza Holding AS and EYJA Fjarfestingafelag III EHF, the existing minority shareholders in Domino’s Norway.

The term “sell” is a bit of a misnomer as Domino’s is paying £7mln to offload the business and has agreed to swallow the Norwegian business’s losses until the transfer is completed.

Shares in Domino’s were up 1.9% at 31.27p.

Haynes Publishing Group PLC (LON:HYNS), which put itself up for sale a while back, motored 60% higher to 690p after agreeing to an offer from Infopro Digital worth 700p a share.

3.00pm: Footsie stops the rot

US indices opened lower with the Dow Jones 177 points (0.6%) lower at 29,374 and the S&P 500 off 10 points (0.3%) at 3,370.

Like the Dow, the Footsie is nursing a triple-digit fall although only just; the index is down 102 points (1.3%) at 7,432.

2.15pm: US indices to open lower

US benchmarks were set for heavy falls after China reported 254 more deaths from the coronavirus (COVID-19) over the last 24 hours.

The Dow Jones, which yesterday climbed 275 points to close at 29,551, is expected to plunge around 159 points at the outset.

The S&P 500, which rose 22 points yesterday is tipped to open at around 3,365, down 14 points.

The US headline inflation rate for January was confirmed at 2.5%, after rising 0.1% month-on-month following December’s 0.2% increase.

“While headline inflation is above target, the US Fed’s preferred measure, Personal Consumption Expenditure (PCE), remains relatively well anchored, allowing the Fed to remain accommodative. The labour market remains tight, with robust non-farm payrolls in January and wage growth of 3.1%, giving consumers decent spending power to bolster the economy in 2020; however, this trend appears to be slowing rather than accelerating,” commented Robert Alster of Close Brothers Management.

“With the Phase One trade deal with China signed, US manufacturing sentiment may improve, though the Coronavirus outbreak may put the brakes on this recovery for a quarter or two. Chinese consumption will be negatively affected but the real question is how swiftly the economy rebounds. Estimates suggest a slowdown in China in Q1 could shave 0.2% off 2020 global growth but, if the impact is protracted, the Fed may need to rethink its response.

“The elephant in the room is the looming presidential election; more uncertainty than usual around the Democratic nomination has left markets struggling to price in the impact, but if Sanders’ early strength continues then business confidence will take a hit,” Alster suggested.

1.30pm: “The pound seems to like this reshuffle”

The FTSE 100 was close to its low point for the day with sterling’s strength continuing to dampen enthusiasm for blue-chips.

London’s index of heavyweight shares was down 119 points (1.6%) at 7,415, 8 points above the intra-day low.

Sterling is up eight-tenths of a cent against the dollar against US$1.3039 following the surprise resignation of the chancellor of the exchequer, Sajid Javid.

“The resignation of the Chancellor just a few weeks ahead of the Budget was definitely not in the script,” said Tom McPhail, the head of policy at Hargreaves Lansdown.

“Given the new Chancellor’s relative lack of a power base and rapid ascent of the political ladder, the forthcoming Budget will probably be more of the Prime Minister’s making than would otherwise have been the case; this increases the likelihood of a bold Budget with populist spending announcements,” McPhail suggested.

“The trade-off is it probably also increases the likelihood of targeted tax raids to pay for the Prime Minister’s largesse. Javid had been reported to be examining some potentially contentious policy moves, such as a mansion tax and cuts to pension tax relief for the wealthy and I think today’s announcement escalates that risk,” McPhail said.

Sterling initially dipped on the news of the resignation but rallied strongly once Rishi Sunak, the chief secretary to the Treasury, was appointed in his place.

“The pound seems to like this reshuffle,” said Neil Wilson at markets.com.

“Gilt yields sprung higher, as the market bets on this meaning more spending, less austerity and more growth. Traders are betting that Johnson and Cummings owning the Treasury and controlling the purse strings means more spending.

“This is a blatant power grab by Boris and Cummings over the Treasury – and it comes barely a month ahead of the first post-election Budget. On first glance, I think this means purse strings are being loosened. Spending will be dictated by political needs and necessity, rather than the Treasury acting as a brake on political giveaways,” Wilson said.

“We know Boris has a predilection for the big infrastructure projects and we also know his plans to level up with spending on the North and Midlands. The prospect of higher spending, fiscal stimulus is sterling positive. Look now for GBPUSD to make the 1.3450 level,” Wilson suggested.

12.15pm: The Jav exits

The FTSE 100 index retained a triple-digit loss at lunchtime not helped by shock news that Sajid Javid has resigned as chancellor of the exchequer as prime minister Boris Johnson carried out a post-Brexit cabinet reshuffle.

BBC News reported that Javid had resigned after rejecting an order from the PM to fire his team of aides, saying “no self-respecting minister” could accept such a condition.

Javid, the former home secretary who was appointed chancellor by Johnson when he became prime minister in July, had been due to deliver his first Budget in four weeks’ time.

He has been replaced by Rishi Sunak, previously Chief Secretary to the Treasury.

The news added to the pressure on the UK blue-chip index, although it was already sharply lower as worries over the impact of the coronavirus returned once more to hit markets, dropping 111 points to 7,423, albeit holding above the session low of 7,406.

The fall came as sterling rose, with the UK currency jumping 0.5% versus both the dollar and the euro.

Commenting on the resignation, Adam Seagrave, head of Global Sales Trading at Saxo Markets, said: “The initial reaction has been weaker GBP but we are now seeing a rally to a new high. This is presumably the market interpreting the announcement as Boris wanting advisors who are more willing to back aggressive fiscal stimulus.”

11.00am: Triple-digit fall for the Footsie

The FTSE 100 is now sporting a triple-digit fall with just nine index constituents in positive territory.

The index of London’s leading shares is down 113 points (1.5%) at 7,422.

Among the few blue-chips showing a bit of fizz is Coca-Cola bottler Coca-Cola HBC (LON:CCH), which is up 3.4% after an upbeat trading update.

Barclays PLC (LON:BARC) was down 2.5% at 174.86p after the release of its results for 2019 and, perhaps more pertinently, media reports that have highlighted historical links between the company’s chief executive officer, Jes Staley and the late sex offender, Jeffrey Epstein.

“Just when closure on the PPI scandal could have bought Barclays some breathing room, the bank will now attract lurid headlines over the relationship between chief executive Jes Staley and disgraced American financier Jeffrey Epstein but the real shocker in today’s full-year results is Barclays’ admission that it will not meet the 10% return on tangible equity target laid down by Mr Staley and CFO Tushar Morzaria for 2020,” says Russ Mould, AJ Bell’s investment director.

Helal Miah, an investment research analyst at The Share Centre, said the results are “somewhat encouraging” but he remains wary of the bank.

“It’s still involved in many litigation related issues and we feel it needs to get its act together and this morning’s news about its CFO just will not help it shake off its past. Should this issue drag on and become a distraction; its activist investor base may step again up to push for a cleaner and less controversial leadership,” Miah said.

9.45am: Centrica leads the retreat on a day when risk-averse investors seek refuge in utility companies

The fact that utility companies feature among the minority of Footsie companies that are rising today tells you about the mood of the market.

Just don’t mention British Gas owner Centrica PLC (LON:CNA), which is the biggest blue-chip faller at 70.14p, down 17%.

Throw in the by now standard chunky fall for under-fire Middle Eastern hospitals operator NMC Health PLC (LON:NMC), which is down 7.2%, and some heavy dividend payers going ex-div today and it is little wonder that the FTSE 100 was down 71 points (0.9%) at 7,464.

Overnight, the Royal Institution of Chartered Surveyors reported a continued pick-up in sales activity across the US housing market in January.

RICS takes it survey results and rebases them to effectively treat them as if it had received 100 responses, and then subtracts the number of surveyors reporting a decline in activity from those reporting a rise to achieve a balance figure.

It reported a net balance of +19%, up from +11% in December. In addition to the increase in homes being put up for sale, January saw an increase in the number of people looking to buy as new buyer enquiries rose to a net balance of +23% from +19% in December. As well as this, agreed sales rose for a second month in a row (a net balance of +21%).

RICS said survey respondents expect this refreshed optimism to continue with sales anticipated to rise across all UK regions, both in the near term and for the year to come.

“While the improvement was widespread, the most significant increase was seen in London, where the house price balance jumped 37pts to +28, the highest since August 2015, while the house price balance in the South East (up 28pts) returned to positive territory for the first time since mid-2017,” noted Daiwa Capital Markets.

“Other details of today’s report were more encouraging for the near-term housing market outlook too, with a notable increase in the survey measure of supply of properties on the market – reportedly the most since the summer of 2013 – accompanied by higher buyer enquiries and the most agreed sales since April 2014. And so, surveyors were more optimistic about near-term sales expectations too, with the relevant index the strongest since 2015, while the outlook for prices over the near term and the coming twelve months were the firmest since the start of 2016,” it added.

None of which prevented Barratt Developments PLC (LON:BDEV), Persimmon PLC (LON:PSN) and Taylor Wimpey PLC (LON:TW.) from falling by between 0.9% and 1.5%.

Berkeley Group Holdings PLC (LON:BKG), with its strong focus on London, defied the trend with a 0.4% increase.

8.35am: Footsie reinfected with fear

Renewed jitters around the coronavirus, or COVID-19 as it has now been christened, hit the London market hard in early trade on Thursday

The FTSE 100 index opened 65 points lower at 7,469.42, tracking overnight falls by Asian markets 

A change in diagnostic criteria by the Chinese authorities brought us the true picture on Thursday with the numbers infected by and dying from the virus firmly on an upward trajectory.

Hopes had been rising that the SARS-like virus had begun to plateau.

“Yesterday we warned curb your enthusiasm, and all week we have been warning that the markets were totally out of line with the fat tail risks that this Covid-19 virus was presenting,” said Dutch bank Rabobank.

“Especially so when all of us are relying on data from China to try to accurately track this outbreak. Those market quants who have been merrily looking at the recent decline in the day-to-day new virus cases woke to a shock this morning.”

Away from matters viral, there was no doubting the day’s big taking point, British Gas owner Centrica (LON:CNA). Its shares slumped 13% early on as it sank to a full-year loss of more than £1bn.

The energy giant has been hit by price cap on UK household energy bills and wrote down the value of oil and gas production assets to reflect weaker commodity prices.

Proactive news headlines:

Clear Leisure PLC (LON:CLP) said the Turin Court has rubber-stamped an earlier “fast track” ruling that confirms the company’s controlling stake in Sipiem SpA. The court ruled that Sipiem’s minority shareholder had, in 2015, illegally tried to remove control of the company from Clear Leisure.

Amur Minerals Corporation (LON:AMC) has appointed an experienced senior banker, Adam Habib as an advisor to its board on transactions and corporate development. The AIM-listed firm said Habib will have the responsibility for advancing funding activities and establishment of strategic partnerships allowing for the continued development of the Kun-Manie nickel/copper sulphide project in Russia.

i3 Energy PLC (LON:i3E) has issued a corporate update confirming “good progress” with its North Sea farm-out efforts and also its intention to establish a secondary stock market listing. “The company is making good progress in its farm-out process to fund a 2020 appraisal drilling program on its assets in Blocks 13/23c in the UK North Sea,” i3E said.

Futura Medical PLC (LON:FUM) said it has held “positive initial discussions” with EU regulators as it confirmed it will seek to have its erectile dysfunction (ED) gel approved as a medical device rather than a drug. The company has previously stated this approach should provide a simpler route to sign-off and also “represents a wider overall commercial opportunity”.

accesso Technology Group PLC (LON:ACSO) has hailed “powerful business results” for 2019 after securing several noteworthy customer renewals and 43 new or expanded ticketing contracts over the year. The e-ticketing specialist said it had reached renewal agreements with several clients including theme park owner Palace Entertainment and the Washington State Fair while also securing new customers such as ITV Broadcasting, the Mount Washington Cog Railway and The New York Botanical Garden.

Providence Resources PLC (LON:PVR) has confirmed it is unwinding the Chinese partnership at the Barryroe field and it is undertaking a new farm-out process. The main focus is to advance the appraisal of the Barryroe field, to answer key uncertainties about the reservoir and bring the project closer to development. Presently, Providence has sufficient working capital to last until late March or early April, and, new funding options are now being explored.

Angling Direct PLC (LON:ANG) has opened its 35th UK store in Warrington, Cheshire. The fishing tackle and equipment seller said the 4,500 square foot store, located at the Cockhedge shopping park, was “ideally situated within a highly populated and enthusiastic angling community and is surrounded by lakes and other river venues such as the River Mersey and Weaver”.

Columbus Energy Resources PLC (LON:CERP) has told investors it will update on the Saffron well’s results “as testing progresses”. Well testing began in early February, assessing the Lower Cruse reservoir, and previous logging confirmed the Middle Cruse reservoir as a valid secondary target for testing.

Open Orphan PLC (LON:ORPH) has appointed interim chief financial officer Leo Toole to the position full time. Bringing more than 20 years’ experience, Toole previously held roles with Procter and Gamble, ResMed and Sublimity Therapeutics.

Kavango Resources PLC (LON:KAV) has announced the results of the recent drilling programme on its Kalahari Suture Zone (KSZ) project in Botswana. The company said the programme had provided valuable geological information to management to assist in the understanding of the potential of the KSZ to host large copper-nickel (Cu-Ni) mineral deposits.

Personal Group Holding PLC (LON:PGH), a leading provider of employee services in the UK, said its first dividend for 2020 of 5.9p per share will be paid on 27 March 2020 to members on the register as at 21 February 2020. The group added that the dividend, the first of four to be announced this year, represents a 1.3% increase over the equivalent period last year, reflecting the company’s progressive dividend policy. Personal Group also said it will be reporting its preliminary results for the year ended 31 December 2019 on Tuesday 24 March.

Anglo Pacific Group PLC (LON:APF) said it has it received notification that its non-executive chairman, Patrick Meier, on 12 February 2020, acquired 6,310 ordinary shares in the company at a price of 154.48p each. Following this notification, the group added, the total beneficial holding of Meier and persons closely associated with him is 248,437 shares, representing 0.14% of the company’s issued ordinary share capital.

6.50am: Footsie set to open lower 

The FTSE 100 index is set to start Thursday on the backfoot as coronavirus fears remerged for investors.

CFD and spreadbetting firm IG Markets sees the London index down around 10 points, calling the price 7,508 to 7,511 with just over an hour to go until the open.

Equity markets remain in fear over coronavirus generally, and, its impact on the Chinses economy specifically.

“Overnight stock markets in China lost ground on the back of renewed fears surrounding the coronavirus situation,” said David Madden, analyst at CMC Markets.

“Yesterday there was hopes the crisis was being stemmed, but in the past 12 hours the perceptions have changed. There was a spike in the number of cases in the Chinese province of Hubei – the epicentre of the emergency, so equities in mainland China as well as Hong Kong fell. European equity benchmarks are called lower.”

Wall Street recorded a positive finish on Wednesday. The Dow Jones Industrials Average added 275 points, or 0.94% to close at 29,551, while the S&P 500 rose by 0.65% to end the day at 3,379, and the Nasdaq Composite gained 0.9% to 9,725.

However, in Asia this morning, Japan’s Nikkei dipped 0.14% to 23,827, while Hong Kong’s Hang Seng moved 0.25% lower to 27,753, and the Shanghai Composite droipped 0.58% to 2,909.

Around the markets:

  • The pound: US$1.2949, down 0.08%
  • Gold: US$1,573 per ounce, up 0.4%
  • Brent crude: US$55.64 per barrel, up 2.9%
  • Bitcoin: US$10,462, up 1.09%

Significant events expected on Thursday:

Finals: Bank Of Georgia Group PLC (LON:BGEO), Barclays PLC (LON:BARC), Churchill China PLC (LON:CHH), Coca-Cola HBC AG (LON:CCH), Indivior PLC (LON:INDV), Lancashire Holdings Ltd (PLC:LRE), Relx (PLC LON:REL)

Interims: Centrica PLC (LON:CNA), Grit Real Estate (LON:GR1T), MJ Gleeson PLC (LON:GLE)

Trading updates: Gem Diamonds Ltd (LON:GEMD), Great Portland Estates PLC (LON:GPOR), Safestore Holdings PLC (LON:SAFE)

AGMs: Chrysalis (LON:CYS), GCP Infrastructure Investments (LON:GCP), Oxford Metrics (LON:OMG), Paragon Group (LON:PAG), Tritax Eurobox PLC (LON:EBOX), Watkin Jones (LON:WJG)

Ex-dividends knock 11.9 points off FTSE 100: BP (LON:BP.), Royal Dutch Shell PLC (LON:RDSA) (LON:RDSB), Hargreaves Lansdown PLC (LON:HL.), Polymetal International Ltd (LON:POLY)

Economic data: RICS Housing Market Survey, US inflation

City headlines: