London midday: Stocks extend losses after Apple warning; HSBC slides

Tue 18 Feb 2020

LONDON (SHARECAST) - (Sharecast News) - London stocks had fallen further into the red by midday on Tuesday, dragged lower by a stronger pound, as a revenue warning from tech giant Apple sparked concerns about the impact of the coronavirus outbreak.
The FTSE 100 was down 0.8% at 7,375.62.

Sentiment took a hit after Apple warned overnight that it will not meet its revenue guidance for the current quarter due to disruption from the coronavirus outbreak.

Chris Beauchamp, chief market analyst at IG, said: "A warning from Apple has put the cat among the pigeons and provided the first real evidence that the coronavirus will have ramifications beyond China. Markets had been rubbing along in expectation that stimulus from China would smooth over any bumps in the road. But Apple's warning upends those forecasts and suggests that we will see other companies reporting warnings."

On home shores, sterling was up 0.3% against the dollar at 1.3040 after data from the Office for National Statistics showed that employment rose to a record high in the fourth quarter of 2019 but wage growth slowed.

The employment rate for the three months to the end of December rose 0.6 percentage point from a year earlier to reach a new peak of 76.5%. Unemployment fell 0.2 point to 3.8%, in line with expectations.

However, earnings growth slowed to 2.9% from 3.2%, meaning annual growth in total pay was 1.4% adjusted for inflation. Regular earnings have now risen above the level before the financial crisis of 2008.

Capital Economics said: "The larger-than-expected rise in employment in December suggests that the labour market joined the rest of the economy in turning a corner at the end of last year. However, pay growth is softening, which suggests that there may be more slack in the market than implied by the low rate of unemployment."

In equity markets, HSBC was under the cosh after saying it would cut about 35,000 jobs in a radical business overhaul, as the bank reported a one-third fall in annual profit and wrote down more than $7bn (?5.4bn) of assets.

Glencore was on the back foot after saying it swung to a net loss of $404m from a profit of $3.41bn in 2018, as it took a hit from $2.8bn of impairment charges. Adjusted earnings before interest, tax, depreciation and amortisation fell 26% to $11.6bn, but this was still ahead of analysts' expectations of $11.06bn.

Miners were under the cosh more broadly amid worries about the coronavirus, with BHP, Antofagasta and Anglo American all down, while Russian steelmaker Evraz also fell.

BHP retreated as it said first-half earnings surged 29% on the back of higher iron ore prices as the dividend payout was tempered by short term caution over the coronavirus.

On the upside, InterContinental Hotels reversed earlier losses to trade up as its full-year results were in line with consensus expectations but revenue per available room remained weak.

United Utilities and Severn Trent got a boost at JPMorgan said it was upgrading its UK water estimates. The bank upgraded Severn to 'neutral' from 'underweight' and maintained its preference for overweight-rated UU. JPM said it sees "sector valuations continuing to benefit from improved cash flow profile, dividend security and M&A speculation".

Market Movers

FTSE 100 (UKX) 7,375.62 -0.78%
FTSE 250 (MCX) 21,742.94 -0.38%
techMARK (TASX) 4,112.17 -0.11%

FTSE 100 - Risers

NMC Health (NMC) 829.20p 3.65%
United Utilities Group (UU.) 1,038.50p 2.77%
InterContinental Hotels Group (IHG) 4,960.50p 2.71%
SEGRO (SGRO) 923.80p 1.90%
Flutter Entertainment (FLTR) 8,686.00p 1.88%
Polymetal International (POLY) 1,284.50p 1.46%
Hikma Pharmaceuticals (HIK) 1,908.50p 1.38%
Severn Trent (SVT) 2,650.00p 1.30%
Whitbread (WTB) 4,773.00p 1.12%
SSE (SSE) 1,692.00p 1.05%

FTSE 100 - Fallers

HSBC Holdings (HSBA) 553.10p -6.37%
Glencore (GLEN) 226.75p -4.18%
Evraz (EVR) 372.50p -4.02%
Burberry Group (BRBY) 1,948.00p -2.89%
BHP Group (BHP) 1,645.80p -2.71%
Antofagasta (ANTO) 854.20p -2.62%
Auto Trader Group (AUTO) 587.20p -2.59%
Anglo American (AAL) 2,054.50p -2.33%
Smurfit Kappa Group (SKG) 2,804.00p -2.30%
TUI AG Reg Shs (DI) (TUI) 860.80p -2.18%

FTSE 250 - Risers

Future (FUTR) 1,328.00p 2.79%
PureTech Health (PRTC) 328.00p 2.50%
Restaurant Group (RTN) 131.50p 2.26%
PPHE Hotel Group Ltd (PPH) 2,160.00p 1.89%
Petrofac Ltd. (PFC) 371.30p 1.73%
Fresnillo (FRES) 675.40p 1.50%
Watches of Switzerland Group (WOSG) 383.60p 1.48%
Hilton Food Group (HFG) 1,090.00p 1.30%
Schroder Oriental Income Fund Ltd. (SOI) 252.00p 1.20%
Daejan Holdings (DJAN) 5,210.00p 1.17%

FTSE 250 - Fallers

Weir Group (WEIR) 1,347.50p -4.30%
Vesuvius (VSVS) 447.00p -4.04%
Aston Martin Lagonda Global Holdings (AML) 435.90p -3.20%
Wood Group (John) (WG.) 401.00p -2.98%
Kaz Minerals (KAZ) 496.20p -2.97%
Jupiter Fund Management (JUP) 399.20p -2.92%
TI Fluid Systems (TIFS) 229.00p -2.76%
Spectris (SXS) 2,692.00p -2.64%
Virgin Money UK (VMUK) 179.95p -2.41%
Dixons Carphone (DC.) 135.15p -2.35%
Archived Stories

27 Mar London midday: Stocks fall further; Boris Johnson tests positive for Covid-19
26 Mar London midday: Stocks in the red ahead of BoE, US jobless claims
25 Mar London midday: Stocks pare gains as investors mull inflation, retail sales data
24 Mar London midday: Stocks push up despite dismal UK data
23 Mar London midday: Stocks sharply lower as Covid-19 updates roll in