FTSE 100 tipped to rebound though coronavirus weighs on Asian stocks

The FTSE 100 is tipped to make a modest rally on Tuesday after suffering big falls at the start of the week over global market worries about China’s coronavirus outbreak.  

Spread-betters on the IG platform were putting their money on London’s top equity benchmark rising 33 points to around 7,443, nibbling away at the 174-point loss a day earlier.

Cornavirus concerns have not gone away, however, with the Chinese government confirming overnight that 106 people have now died from the pneumonia-like illness, with the number of infected individuals now topping 4,500. 

The fear was evident in local equity markets, with benchmarks in Shanghai and Singapore down more than 2% and the Nikkei down 1%, although the Hang Seng was up slightly.

US stocks had a hard time overnight, with the Dow Jones falling for the fifth session in a row to just below 28,536, dropping 1.6% in sync with the S&P 500, as both endured their worst daily drops in more than three months.

The tech-heavy Nasdaq Composite saw its biggest one-day fall since August, tumbling 1.9% as tech titans such as Apple Inc, Microsoft Corp and Amazon.com all slipped on China supply chain worries.

Apple Inc (NASDAQ:AAPL) will take centre stage later on Tuesday with its earnings.

Crest Nicholson, McCarthy & Stone, Saga and AG Barr

UK company news may be a little less razzle-dazzle, but investors will get two looks at the potentially rallying housebuilding market in Crest Nicholson Holdings PLC (LON:CRST) and McCarthy & Stone PLC (LON:MCS).

Crest’s last update was a profit warning in October, which was delivered alongside a strategic update from new chief executive Peter Truscott.

As a result of the general election result delivering a more decisive UK political situation, pretty much all housbuilding sector analysts say the outlook has improved, though those at Peel Hunt said the main question for Crest is how quickly Truscott can make improvements to the performance.

McCarthy & Stone PLC (LON:MCS) was one of the few housing stocks not to get a wholly glowing report among analysts, with Canaccord Genuity downgrading to a ‘sell’ recommendation on valuation grounds and seeing “little margin improvement” for the company in the year ahead.

Analysts at UBS, another with a ‘sell’ rating, said they will be looking at the “quality of the profit figure”, ie how much is made up from non-cash revaluation gains on rental assets.

Outside of the builders, there also should be some interest in Saga PLC (LON:SAGA), which also has a new chief executive. 

Euan Sutherland, who started in December and who we last saw at Superdry, has activist hedge fund manager Elliott Management on the register so his every utterance will be under extra scruntiny after his predecessor struggled to overhaul the group over many years, though Peel Hunt said the recent underlying momentum in the business has been positive.

Trying to add some more fizz, drinks maker AG Barr PLC (LON:BAG) is another that is following up from a profit warning last time it cracked open its numbers. 

Back then, chief executive Roger White told reporters: “I’m not having another one if there’s anything I can do about it.” 

Some analysts, such as those at Barclays, reckon he may be forced to consume his words, forecasting a not very sweet drop of 26% in profits to £34.1mln.

UK data on Tuesday will mainly centre around the CBI’s distributive trades survey, which will provide a view on the retail sector from 11am.

A December survey showed an improvement to a nine-month high showing a reported sales balance of zero from the -3 shown in November, 

This was not reflected in the official data, so economists at Pantheon Economics they expect it to decline to about -10 in January, while the market consensus is for +5. 

Market data:

Pound: Down 0.2% to US$1.3034

Oil: Down 0.2% to US$59.23

Gold: Up 1.4% to US$1583.45

Significant announcements on Tuesday January 28:

Finals: Crest Nicholson Holdings PLC (LON:CRST), McCarthy & Stone PLC (LON:MCS)

Interims: PZ Cussons PLC (LON:PZC), NWF Group plc (LON:NWF)

Trading announcements: AG Barr PLC (LON:BAG), DP Eurasia NV (LON:DPEU), Euromoney PLC (LON:ERM)), Greencore (LON:GNC), Saga PLC (LON:SAGA), UDG Healthcare PLC (LON:UDG)

Economic announcements: US consumer confidence

City Headlines: 

Financial Times

• Xi Jinping warns of grave situation as coronavirus death toll rises
• UK and EU set for clash on fish and financial services – Dublin suggests City risks losing access if bloc’s boats barred from British waters

Times

Daily Telegraph

• Fifth of shops could vanish as high street withers, British Land boss warns
• High-frequency traders earn nearly $5 billion on global equity markets a year, creating a “tax on market liquidity”, according to a report by the City watchdog.
• Auditors EY accused of pushing out whistleblower, in High Court case
• Rolls-Royce shares drop on fears of mounting trouble with Trent 1000 engine

Story by ProactiveInvestors