• FTSE 100 index drops 32 points
  • US stocks sink lower amid coronavirus worry
  • G20 finance ministers to meet at weekend

5.35pm: FTSE 100 closes in red

FTSE 100 index closed Friday in the red while US stocks also dropped on continued coronavirus fears and disappointing manufacturing data.

Footsie closed down over 32 points at 7,403.

The mid-cap FTSE 250 also slumped over 86 points at 21,780.

On Wall Street, the  Dow Jones Industrial Average slumped over 194 points at 29,025. The S&P 500 shed around 26 to 3,346.

Ut came after US manufacturing PMI fell faster than forecast, from 51.9 to 50.8.

In London, Pearson (LON: PSON) was the top Footsie loser, shedding 3.87% to US$561.40 as the publishing giant confirmed a tough outlook for this year amid a slowdown in US higher education courseware sales.

Last year saw a 12% fall in sales of its US printed university course books, the owner of the  Financial Times, Economist and Penguin revealed.

3.45pm: FTSE and Wall Street slide after US manufacturing PMI

The FTSE 100 has extended its lows to levels not seen since the start of the month, dropping 66 points (0.9%) to 7,370.68, continuing the lurch lower after Wall Street came on line.

“It looked like markets were going to escape the day’s lows thanks to a broadly better than forecast set of European manufacturing PMIs. Then the US numbers were released,” said Connor Campbell at Spreadex.

US flash manufacturing PMI fell faster than forecast, from 51.9 to 50.8, sending markets tumbling.

3.05pm: FTSE set back as Wall Street slides

The Footsie has tripped lower and stocks across the pond tumbled as they played catch-up with European equities.  

Heading for a second day in the red, US stocks were reacting to fading hopes that the virus would peak this month as cases continued to rise in China and further afield. 

Analysts at S&P said that if the outbreak does not peak until April, China’s economic growth will slow to 4.4% this year compared to 6.1% growth in 2019.

On Wall Street, the Dow Jones index fell 267 points (0.9%) in the first half hour to 28,952.46, while the broader S&P 500 lost 1% to 3,340.13.

Faring worst, due to its heavy weighting of tech firms, most with exposure to China via factories and supply chains, the Nasdaq Composite dropped 1.3% to 9,628.13.

Back in Blighty, the FTSE 100 has capitulated after fighting back from its early losses, and was down 37 points (0.5%) at 7,399.13.  

In its daily briefing, the World Health Organisation said as of 6am GVA time this morning, China has reported a total of 75,567 cases of COVID-19, including 2,239 deaths. In the past 24 hours, 892 new confirmed cases and 118 deaths had been reported.

“The significant fall in confirmed cases is partly due to another change in the way China reports numbers,” said WHO director-general Tedros Ghebreyesus.

“Last week China started reporting clinically-diagnosed cases, in addition to lab-confirmed cases. They have now switched back to reporting suspected & lab-confirmed cases.

“This may indicate because the health system in Wuhan, China have regained the ability to test all suspected COVID-19 cases. As a result, some cases that had been clinically confirmed have now been subtracted from the total because they have tested negative.”

Outside China, there are now 1,152 COVID-19 cases in 26 countries and 8 deaths.

Tedros said although the number of cases in Hubei province continues to decline, the WHO was concerned about an increase in the number of cases in Shandong province, and we are seeking more information about that.

The WHO is continues to have concern over the potential for COVID-19 to spread in countries with weaker health systems, though today the organisation has appointed four special coronavirus envoys, “to provide strategic advice and high-level political advocacy and engagement in different parts of the world”.

2.10pm: FTSE looks ahead

The FTSE 100 is down 15 points or 0.2% at 7,421.29 as the pound rallies 0.4% to $1.2935.

London’s equity benchmark is still off its worst losses from earlier, thanks to rises from stocks including gold miners, housebuilders and companies that are due to report results next week.

Top riser on the index is Polymetal International (LON:POLY), the Russian gold and silver miner, while Hochschild Mining (LON:HOC) and Centamin (LON:CEY) were in the FTSE 250’s top five. 

Prices of the yellow metal keep soaring as investors look for safe havens amidst the uncertainties surrounding the hit to economic growth from the coronavirus outbreak.

“All the stops are out for gold and momentum buying is pushing up prices even further,” said Neil Wilson at Markets.com. “We’re seeing a very rapid march higher to north of $1630, knocking out a fresh 7-year high.”

Blue-chip housebuilders were on the rise, with Berkeley (LON:BKG) second on the leaderboard, while Persimmon (LON:PSN) and Taylor Wimpey (LON:TW.) both in the top 10, with Countryside (LON:CSP) and Redrow (LON:RDW) among the top mid-cap risers.

Capital Economics’ Hansen Lu said recent leading indicators “could be understating the coming recovery in housing sales”. While we maintain our view that the recovery in transactions and lending will be modest, this suggests that the risks to our forecasts are on the upside.

Another factor lifting certain stocks was investors looking ahead, with Persimmon and Taylor Wimpey among the busy throng reporting results next week, with Meggitt (LON:MGGT), Standard Chartered (LON:STAN), London Stock Exchange Group (LON:LSE) and Bunzl (LON:BNZL) also on the leaderboard ahead of their numbers.

For more detail on the coming week, we’ve just published our market preview.

12.45pm: Cautious US start seen

The FTSE 100 index remained weaker in lunchtime trade but held off morning lows as investors looked towards the open on Wall Street for fresh direction, although US stocks are also predicted to retreat amid revived coronavirus concerns.

Around 12.40pm, the UK blue-chip index was off about 7 points at 7,429, albeit just below the day’s peak of 7,436.70 and well above the morning low of 7,388.01.

After big falls on Thursday, which saw the Dow Jones Industrials average close 128 points lower – but well off the session’s worst point which was a near 400 point drop – Wall Street is set to remain cautious in early trading on Friday, with shares globally looking set to post their worst overall performance in four weeks.

China reported more coronavirus cases on Friday, and with finance leaders from the Group of 20 major economies meeting in Saudi Arabia this coming weekend the risks to the global economy stemming from the outbreak is sure to be on the agenda.

Underscoring the economic impact from the coronavirus, the International Air Transport Association (IATA) has estimated that losses for Asian airlines alone as a result of the outbreak could amount to almost $28bn this year, with most of that in China.

11.35am: Chinese car sales crash amid coronavirus outbreak

Heading into lunchtime, the FTSE 100 had recovered some of its losses from a tumble earlier in the day and was down around 21 points at 7,416 at around 11.35am.

The index has been weighed down somewhat by the unchanged composite PMI for January at 53.3, which caused a rally in sterling at the expense of equities. The pound was 0.25% higher at US$1.2911 against the dollar in late morning.

Sitting at the bottom of the blue-chip fallers was education publisher Pearson PLC (LON:PSON), which sank 4.4% to 558.2p after cutting its 2020 outlook again as its 2019 results fell short of expectations.

In other news, some of the UK’s carmakers could be the next sector to face coronavirus-related issues after car sales in China plummeted 92% in the first half of February as buyers quarantined themselves at home and dealerships remained closed.

The figures will make for bleak reading at Aston Martin Global Lagonda Holding PLC (LON:AML), which counts China as one of its fastest growing markets, while Jaguar Land Rover warned earlier this week that it could run out of parts for its cars as the outbreak disrupted its supply chain.

10.15am: Sterling’s strength weighs on the Footsie

The “flash” Purchasing Managers’ Index (PMI) reading for February was “reassuringly solid, given virus and weather headwinds”, according to Samuel Tombs at Pantheon Macroeconomics.

The composite PMI was unchanged at 53.3 but the services PMI dropped to 53.3, from 53.9 in January, which was marginally below the consensus forecast of 53.4. The manufacturing PMI rose to 51.9 from 50.0 in January, which was above the consensus forecast of 49.7.

“The unchanged level of the composite PMI in February is a strong result, given the disruption to the global economy from the COVID-19 (coronavirus) outbreak and bad weather in the UK this month,” Tombs said.

“The dip in the services PMI likely reflects the hit to demand in the restaurants, hotels and leisure sector from February’s exceptionally high level of rainfall, which has been three times its long-run average. The services PMI has fallen on all of the six past occasions when rainfall has been more than double its average for that month of the year, by 1.3-points on average. Note storms Ciara and Dennis hit during the weekends of 8-9 and 15-16, respectively. Markit conducted its survey between February 12 and 19, so it should have captured the impact of the storms,” he added.

“Admittedly, supply chain disruption caused by the COVID-19 outbreak counterintuitively accounted for half of the rise in the manufacturing PMI. The suppliers’ delivery times index, which fell in February by the most on record, is inverted for the PMI calculation and has a 15% weight. Even so, increases in the output and new orders indices to 52.8 and 52.3, respectively, from 49.5 and 50.3, indicate that underlying demand has increased too,” Tombs calculated.

On a day when PMIs have been released across Europe, the pound was more than holding its own on foreign exchange markets, surging four-tenths of a cent against the US dollar at US$1.2922, while against the euro it was up one-seventh of a cent at €1.1959.

None of which was encouraging equity investors to buy UK blue-chips, many of which are significant dollar and euro earners; the FTSE 100 was down 41 points (0.6%) at 7,395.

9.35am: UK PMI tops expectations

It was the usual suspects leading the Footsie lower this morning; miners and fellow travellers, plus NMC Health PLC (LON:NMC).

The index was down 41 points (0.5%) at 7,396, weighed down by falls from the miners, which were on offer as fears grow over the impact the spread of coronavirus (COVID-19) will have on the world’s economy.

The likes of Glencore PLC (LON:GLEN), BHP PLC (LON:BHP) and Anglo American plc (LON:AAL) were down by 1,5% or more while platinum refiner Johnson Matthey PLC (LON:JMAT) shed 2.1% and Russian steel-maker Evraz PLC (LON:EVR) was down 2.7%.

Fashion outfit Burberry Group PLC (LON:BRBY), which counts China as a major market, was also feeling the virus fall-out and trading 52p lower at 1,868p.

Meanwhile, controversy magnet NMC Health PLC (LON:NMC) was down 3.4% at 828p as it admitted it still does not have scooby how many shares its three major shareholders own.

Pearson PLC (LON:PSON), however, was the worst-performing blue-chip, however, after its full-year results this morning failed to change the bearish view on the company.

The shares fell 4.1% to 560p as its 2019 profits came in short of management guidance that was lowered as recently as last month. Someone is not learning their lessons at the academic publisher.

“John Fallon’s decision to shift Pearson from textbooks to e-books seems to have been the correct one, with sales of physical North American textbooks in freefall. Unfortunately, convincing customers to fork out top-shelf prices for digital alternatives turns out to be quite a challenge and the transition has seen Pearson lose market share,” said Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“There is light at the end of the tunnel though. As North American courseware shrinks, its impact on group numbers will also diminish and the growing digital and assessment services will become the driving force behind performance. The incoming management team will be relieved about that.

“The pain of the last few years shouldn’t be underestimated though. Funding the transition has called for the sale of trophy assets like Penguin Random House and the Financial Times and profits are not much more than half of what they were at the start of last decade. We see Pearson as a textbook example of the risks incumbents face from digital disruption,” Hyett said.

Meanwhile, the UK Composite Purchasing Managers’ Index from Markit/CIPS for February came in unchanged from the previous month at 53.3, versus expectations of a reading of 52.8. A reading above 50 indicates an expansion in activity.

Sticking with macroeconomic items, borrowing (public sector net borrowing excluding public sector banks, PSNB ex) in January 2020 was in surplus by £9.8 billion, £2.1 billion less of a surplus than in January 2019, the Office for National Statistics reported.

8.40am: Weak start to week end

After some fun and games on Wall Street after hours – a period in which the Dow lost 400 points before recovering some ground – London opened with a minor wobble.

The index of UK blue-chips 37 points lower at 7,400.00 

WATCH: Morning Report: Canadian Overseas Petroleum’s Millholland to provide C$200,000 loan

Market watchers put the US volatility down to nerves with the main stock benchmarks in nose-bleed territory.

That said, the jitters throughout Asia mirrored continuing worries over the spread of the coronavirus and whispers that there had been a spike in Beijing hospital admissions.

Looking ahead we have read-outs from purchasing managers surveys in the US, UK, and Europe that could guide sentiment.

Unsurprisingly the China-linked exporters were on offer. Burberry (LON:BRBY), which relies on the country’s newly-minted middle class for a lot of its growth, was down 2%, also pressured by a price target cut from US broker Jefferies.

The miners, led by BHP (LON:BHP), off 1.8%, were also weaker, perhaps foreshadowing a slowdown in economic activity in the resource-hungry People’s Republic.

But on the up, Daejan Holdings (LON:DJAN) spiked more than 50% higher after a bid vehicle driven by Freshwater Group made an offer for the shares in the FTSE 250 property firm it does not already own.

Proactive news headlines:

Canadian Overseas Petroleum Limited (LON:COPL) (CSE:XOP) is to receive C$200,000 as a loan from its chief executive, Arthur Millholland, so that it can continue discussions with investors and service providers over plans for the OPL 226 asset. This year the company wants to start drilling an appraisal well in OPL 226 in Nigeria. The loan will cover working capital, providing room for the OPL 226 talks to continue.

Ariana Resources PLC (LON:AAU) said its Kiziltepe mine in Turkey exceeded its production guidance in 2019. The mine, which is part of the Red Rabbit joint venture (JV) with Proccea Construction, produced 27,985 ounces of gold in 2019, which was comfortably above guidance of 25,000 ounces (oz) and up by around 12% on 2018.

Touchstone Exploration Inc. (LON:TXP) (TSX:TXP), an oil and gas exploration and production company active in the Republic of Trinidad and Tobago, said it will be holding a live online investor presentation and Q&A session for investors at 7.00pm GMT on Tuesday 25 February. The group added that the webcast will be recorded and made available on ValueTheMarkets.com after the event.

AdEPT Technology Group PLC (LON:ADT) has unveiled plans to raise up to £4mln to fund potential acquisitions as part of a wider strategy to expand the business. The IT services firm said the funds will be raised through a placing of around 1.24mln new shares to certain existing shareholders and institutional and other investors at a price of 320p each, an 11% discount to its closing price on Thursday, through an accelerated bookbuild which will begin immediately.

Oncimmune Holdings PLC (LON:ONC), a leading global immunodiagnostics group, has been awarded the ‘Winning in Business in Spain’ award at the Department for International Trade’s (DIT) UK-Spain Business Awards held on 20 February 2020 at the Madrid Stock Exchange. The awards celebrate the extensive commercial relationships between the United Kingdom and Spain.

Eco (Atlantic) Oil & Gas Ltd. (LON:ECO) (CVE:EOG), the oil and gas exploration company with licences in highly prospective regions in South America and Africa, announced that it has been recognized as a 2020 TSX Venture 50 company, an annual ranking of top-performing companies on the TSX Venture Exchange over the last year, for the third consecutive year. Gil Holzman, president and CEO of Eco Atlantic commented: “This recognition is a testament to the substantial progress the Company has made over the past few years; delivering on strategy, exploration success, strong financial position, and value creation to shareholders. We are confident that 2020 will be another exciting and busy year for Eco as we are pushing to make progress in both our Guyana and Namibia operations, and we look forward to updating our shareholders on progress in due course.”

Verona Pharma PLC (LON:VRP) (NASDAQ:VRNA), a clinical-stage biopharmaceutical company focused on respiratory diseases,  said it will report its audited financial results for the full year ended December 31, 2019 on Thursday, February 27, 2020 and host an investment community conference call at 9:00 am EST/2:00pm GMT to discuss the full-year financial results and provide a corporate update.

accesso Technology Group PLC (LON:ASCO), the premier technology solutions provider to leisure, entertainment, hospitality, attractions and cultural markets, said it will announce its financial results for the 12 months ended 31 December 2019 on Wednesday 18 March 2020.

Amur Minerals Corporation (LON:AMUR), the nickel-copper sulphide mineral exploration and resource development company focused on the far east of Russia, announced that it yesterday granted 10,000,000 warrants over the company’s ordinary shares with an exercise price of 2.12p each to the participants of the fund-raising completed on 4 November 2019.  Additionally, the group said, 3,000,000 warrants over the company’s shares with an exercise price of 2.12p each have been granted to SP Angel Corporate Finance. Both sets of warrants have an expiry date of 20 February 2023.

Open Orphan PLC (LON:ORPH), the rapidly growing specialist CRO pharmaceutical services company which has a focus on orphan drugs and is a world leader in the provision of virology and vaccine challenge study services, and has Europe’s only 24 bedroom quarantine clinic with onsite virology lab in Queen Mary’s Hospital London, announced that it will be attending and presenting at the ShareSoc Growth Company Seminar on February 25, 2020 at  DoubleTree by Hilton Hotel, One Piccadilly Place, 1 Auburn Street, Manchester M1 3DG . The group said Cathal Friel, Open Orphan’s executive chairman will be presenting from 18:40 onwards to update existing and potential investors on the company’s business plans for 2020.

6.45am: Footsie expected to be slow out of the stalls 

Having faded badly in the final furlong yesterday, the FTSE 100 index is set to continue that trend this morning and come slowly out of the stalls.

Spread betting quotes point to London’s index of blue-chip shares shedding 12 points to open at around 7,425, and the blame is once again being put on the coronavirus.

At present, the virus is causing nowhere near the number of deaths typically caused by regular influenza but that has not stopped markets getting anxious about the spread of the virus, although there was some reassurance from the Chinese authorities that they are getting to grips with the outbreak.

“The downward trend will not be reversed,” said Ding Xiangyang, deputy chief secretary of the State Council and a member of the central government’s supervision group.

Nevertheless, there has been an increase in the number of companies reporting disruption related to the virus.

“News are discouraging,” said Ipek Ozkardeskaya, the senior analyst at Swissquote Bank, which is difficult to argue with except from a grammatical standpoint.

“It’s about time we start seeing bad data creeping in and giving us a better perception of the true impact of the coronavirus on the global economy. In this respect, recent releases point that new car sales plunged 92% in China in February and the airline traffic is expected to post the first drop since 2011 amid heavy virus containment measures in China and elsewhere took a heavy toll on travel globally,” the analyst noted.

Global markets in retreat

Yesterday, the Dow Jones Industrial Average shed 128 points to close at 29,220, while the S&P 500 fell 13 points to 3,373.

Today, Asian markets were mostly in retreat. Japan’s Nikkei 225 shed 90 points at 23,389 and Hong Kong’s Hang Seng index was 240 points in the hole at 27,370.

From a UK perspective, the latest final composite purchasing managers index (PMI) will indicate whether December’s post-election momentum has held up.

A positive result “will in all likelihood put to bed any speculation that the Bank of England will be cutting rates any time soon,” according to Michael Hewson, chief market analyst at CMC Markets (UK), particularly ahead of next month’s UK budget – which remains scheduled for 11 March.

On the corporate front, Pearson PLC (LON:PSON), the publishing company, will be looking to lay to rest the oft-expressed fear that profit warnings come in threes.

Given that it is only a month or so since its last profits warning, it is unlikely that its full-year results statement today will contain another reduction in sales and profits guidance.

Significant announcements expected on Friday:

Finals: Pearson PLC (LON:PSON)

Economic data: UK flash PMIs

Around the markets:

  • Sterling: US$1.2894, up 0.12 cents
  • 10-year gilt: yielding 0.581%, up 2.32 basis points
  • Gold: US$1,632.00 an ounce, up US$11.50
  • Brent crude: US$58.73 a barrel, down 58 cents
  • Bitcoin: US$9,702, up US$89

City headlines:

  • Financial Times

  • China cuts a benchmark lending rate in a bid to shore up the country’s virus-hit economy.
  • Roger Stone, the erstwhile confidant of Donald Trump, has been sentenced to 40 months in gaol for lying to Congress, obstruction and witness tampering to protect Trump.
  • ViacomCBS shares plunged after the newly recombined television and film company posted a loss in its first earnings report.
  • The Times

  • Morgan Stanley is to buy E-Trade, a popular online stockbroker, for $13 billion in the largest acquisition by a multinational bank since the financial crisis.
  • Lloyds Banking Group’s pre-tax profits slid by 26% last year after it set aside almost £2.5 billion to cover the cost of compensating customers mis-sold PPI.
  • De Beers raised its marketing spending to the highest in a decade last year in an attempt to bolster demand and counter a slump in profit.
  • Royal Dutch Shell will not “get into an arms race” with BP over carbon targets, a senior executive has said.
  • Borrowings at BAE Systems are set to more than quadruple this year as it attempts to settle its legacy pension issues and pay for its opportunistic shopping spree last month.
  • The Guardian

  • Retail sales rebounded last month on average across the high street and online by 0.9%, reversing a 0.6% decline during December, the Office for National Statistics said.
  • Amazon has overtaken Netflix to become the fastest-growing video-on-demand service in the UK; Amazon Prime Video subscriber numbers jumped by 35% year-on-year in the fourth quarter.
  • Laura Ashley is to revive the “timeless” designs of its late founder in the latest attempt to breathe new life into the struggling British heritage brand.
  • Flooding and damage left in the wake of Storm Dennis, which swept across the UK on 15 and 16 February, is estimated to cost £225 million in insurance claims, taking the total insurance costs from two February storms to £425 million.
  • Daily Mail

  • Tees Valley mayor Ben Houchen has reached an agreement to buy an 840-acre site on the south bank of the Tees from Thai steel firm, SSI UK, reviving steelmaking in the North East town.
  • Conflicted accountants are blocking thousands of clients from reclaiming significant sums of money from Swiss banks, it has been claimed.
  • Factory orders hit a six-month high in February amid ‘early signs’ of a turnaround, the monthly trends survey by the Confederation of British Industry showed.
  • BAE Systems‘ boss Charles Woodburn brushed aside concerns about the future impact of a £10 billion agreement to sell 48 Typhoon fighter jets to Saudi Arabia.
  • Lloyds boss Antonio Horta-Osorio took a £2 million pay cut last year amid mounting speculation that his days at the bank are numbered.
  • Anglo American chief Mark Cutifani has defended its £405 million bid for struggling Yorkshire potash miner Sirius Minerals as it faces a mounting backlash over the takeover.
  • Boris Johnson was last night facing a furious backlash over a proposed tax grab on pensions that would leave workers £10 billion a year worse off.
  • The Daily Telegraph

  • Next month’s Budget is a golden opportunity to reform Britain’s broken stamp duty system and get the country moving again, MPs, economists and campaigners have said.
  • Barclays is scrapping technology which allowed bosses to spy on its bankers following a backlash over the invasion of staff privacy.