London open: Stocks rise despite weak China data; Burberry slumps

(Sharecast News) - London stocks rose in early trade on Friday as investors brushed aside weak Chinese data. At 0900 BST, the FTSE 100 was up 0.8% at 7,092.64.

Sentiment got a boost after two US Federal Reserve officials - Fed governor Christopher Waller and St Louis Fed President James Bullard - suggested they were both leaning towards a 75 basis points rate hike this month and away from a 100 basis points increase.

Investors were also digesting the latest data out of China, which showed that economic growth slowed sharply in the second quarter as the country's zero Covid strategy took its toll.

According to the National Bureau of Statistics, real GDP grew by 0.4% year-on-year in the second quarter, hitting a two-year low and down from 4.8% in the previous quarter. Analysts had been expecting 1.2% growth.

On a quarter-on-quarter basis, GDP fell 2.6% following 1.3% growth in Q1 and versus expectations for a 2% contraction.

"Domestically, the impact of the epidemic is lingering," the NBS said, adding that the risk of stagflation in the world economy is rising.

Shanghai was locked down for two months until the end of May, while Beijing was also placed on lockdown several times.

Craig Botham, chief China+ economist at Pantheon Macroeconomics, said:"Zero-Covid is the key culprit for the quarterly weakness, shutting down a swathe of manufacturing for half the quarter, and scything down much of the service sector.

"The monthly data at least points to a rebound underway, which should see activity spring back in Q3. But the property drag is only getting worse, and without more aggressive policy support we think the Q3 rebound will prove short-lived. Covid cases are also edging higher once again, raising the risk of renewed lockdowns. Reaching the 5.5% growth target looks increasingly implausible."

In equity markets, luxury car maker Aston Martin rallied as it reaffirmed its outlook and announced a £653m equity capital raise to "meaningfully" de-leverage the balance sheet, in a move that will result in Saudi Arabia's sovereign wealth fund becoming its second-biggest shareholder.

The company will place 23.3m shares at 33p each with Saudi Public Investment Fund (PIF) to raise £78m in exchange for a 16.7% stake. This will make PIF the car maker's second-largest shareholder after chairman Lawrence Stroll. There will also be a rights issue to raise £575m.

Luxury fashion brand Burberry was under the cosh, however, as it said first-quarter same-store sales increased just 1% year-on-year as revenues were impacted by lockdowns across mainland China.

Rio Tinto lost ground after the miner sounded a cautious note on the outlook in its second-quarter production results.

Drinks maker Britvic also suffered heavy losses after posh tonics maker Fever-Tree downgraded its full-year profit guidance amid higher costs and highlighted an "exceptionally challenging" environment. Fever-Tree shares tumbled nearly 30%.

Admiral and easyJet were both knocked lower by a downgrade to 'underweight' at JPMorgan, while Wizz Air was hit by a downgrade to 'reduce' at HSBC. Chemring fell after being cut to 'underweight' at Barclays.

Market Movers

FTSE 100 (UKX) 7,092.64 0.75% FTSE 250 (MCX) 18,604.33 0.67% techMARK (TASX) 4,252.47 0.46%

FTSE 100 - Risers

British American Tobacco (BATS) 3,456.00p 2.69% Harbour Energy (HBR) 323.00p 2.47% Melrose Industries (MRO) 159.75p 2.34% Taylor Wimpey (TW.) 115.85p 2.21% Smith (DS) (SMDS) 278.90p 2.16% Rolls-Royce Holdings (RR.) 87.03p 2.00% BP (BP.) 370.80p 1.88% Shell (SHEL) 1,970.60p 1.77% Kingfisher (KGF) 247.80p 1.77% Barclays (BARC) 148.10p 1.76%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,580.00p -4.16% Entain (ENT) 1,082.00p -1.95% Rio Tinto (RIO) 4,487.50p -1.74% Halma (HLMA) 2,070.00p -1.24% Admiral Group (ADM) 1,910.00p -1.22% London Stock Exchange Group (LSEG) 7,544.00p -1.08% Flutter Entertainment (CDI) (FLTR) 7,560.00p -0.97% Anglo American (AAL) 2,528.50p -0.75% United Utilities Group (UU.) 1,045.00p -0.62% Rightmove (RMV) 585.20p -0.58%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 407.00p 9.61% Ferrexpo (FXPO) 110.70p 3.46% ASOS (ASC) 954.50p 2.91% Royal Mail (RMG) 272.10p 2.83% Plus500 Ltd (DI) (PLUS) 1,600.00p 2.83% Mitie Group (MTO) 63.30p 2.59% Wood Group (John) (WG.) 141.45p 2.46% Bankers Inv Trust (BNKR) 101.40p 2.42% Micro Focus International (MCRO) 273.60p 2.40% Grafton Group Ut (CDI) (GFTU) 762.00p 2.39%

FTSE 250 - Fallers

Britvic (BVIC) 804.50p -5.30% Wizz Air Holdings (WIZZ) 1,731.50p -2.83% easyJet (EZJ) 355.00p -2.58% Wetherspoon (J.D.) (JDW) 528.00p -2.22% Polymetal International (POLY) 175.00p -1.82% 888 Holdings (DI) (888) 148.10p -1.27% Carnival (CCL) 645.80p -1.25% Dr. Martens (DOCS) 239.60p -1.24% Network International Holdings (NETW) 178.70p -1.22% Chemring Group (CHG) 322.50p -1.07%