London open: Stocks rise on China Covid optimism; GSK surges

(Sharecast News) - London stocks shrugged off opening losses to trade a little higher on Wednesday, as investors weighed up a further loosening of Covid restrictions in China against disappointing Chinese trade data and recession fears. At 0835 GMT, the FTSE 100 was up 0.3% at 7,545.77.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Fears are growing that economies are in for a rough time ahead as feverish inflation and the bitter interest rate medicine being used to bring it down take effect."

She said that despite today's easing of restrictions, it's clear China's "Covid nightmare" is not over.

"The world's second largest economy is being hit by a toxic combination of its strict pandemic policies which have crushed domestic sentiment and the severe inflationary headwinds overseas affecting its shipments to countries," she said.

Data released earlier showed that Chinese imports slid by 10.6% year-on-year in November, compared with market estimates of a 6% fall, while exports plummeted by 8.7% last month, much worse than the forecast 3.5% drop.

"The easing of restrictions can't come too soon in terms of trade but authorities are taking a softly-softly approach fearful of a wave of hospitalisations and high hopes of more significant relaxation of the rules have been dashed," Streeter said.

"Travelers heading to other regions in China will now no longer need to show a negative test result and more of those who test positive with Covid can choose to isolate at home instead of in quarantine hotels, but the easing of restrictions appeared to underwhelm investors amid such bleak trade data, with the Shanghai Composite and Hang Seng dropping back sharply in a volatile session."

On home shores, the latest survey from lender Halifax showed that house prices suffered their biggest monthly decline in November since the global financial crisis in October 2008, amid rising mortgage rates.

House prices fell 2.3% on the month following a 0.4% drop in October, with the average price of a house standing at £285,579, down from £292,406. On the year, prices rose 4.7% in November, down from 8.2% growth the month before.

Kim Kinnaird, Director of Halifax Mortgages, said: "The market may now be going through a process of normalisation. While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy - and more specifically the labour market - performs will be key in determining house prices changes in 2023."

In equity markets, GSK surged after a US court ruled in the pharmaceutical company's favour in a case claiming that its former Zantac heartburn drug caused cancer. Haleon, which was recently spun off from GSK, also jumped.

Smurfit Kappa gained after it announced the start of a buyback of up to 1.2m shares.

Mitchells & Butlers was trading up after the pub chain said it swung to a full-year profit despite a challenging backdrop.

Elsewhere, commercial vehicle rental provider Redde Northgate rallied after it said that full-year results would be "modestly above" market views, as it posted a rise in interim profit and revenue, underpinned by fleet growth and new contract wins.

On the downside, online greeting card and gift retailer Moonpig tumbled as it said that interim profits had halved and warned that trading conditions had become progressively more challenging through October and November as it cut its annual sales forecast.

In broker note action, Persimmon was weaker after a downgrade to 'hold' at Investec, while PageGroup was knocked lower by a downgrade to 'underperform' at Jefferies.

Johnson Matthey fell after a downgrade to 'underweight' at JPMorgan and Wood Group was down after Citi cut its rating to 'neutral'.

Market Movers

FTSE 100 (UKX) 7,545.77 0.32% FTSE 250 (MCX) 19,083.30 -0.09% techMARK (TASX) 4,445.50 1.56%

FTSE 100 - Risers

GSK (GSK) 1,562.80p 12.61% Haleon (HLN) 316.45p 7.20% Ocado Group (OCDO) 677.00p 2.23% Smurfit Kappa Group (CDI) (SKG) 3,030.00p 1.68% AstraZeneca (AZN) 11,300.00p 1.35% Severn Trent (SVT) 2,752.00p 1.21% Compass Group (CPG) 1,920.50p 1.16% Smith & Nephew (SN.) 1,083.00p 1.03% Relx plc (REL) 2,340.00p 0.99% Associated British Foods (ABF) 1,686.00p 0.99%

FTSE 100 - Fallers

Glencore (GLEN) 542.40p -2.46% Harbour Energy (HBR) 304.10p -1.68% Persimmon (PSN) 1,250.00p -1.57% Shell (SHEL) 2,324.50p -1.44% Antofagasta (ANTO) 1,416.50p -1.29% Vodafone Group (VOD) 88.17p -1.23% Croda International (CRDA) 6,820.00p -1.22% BP (BP.) 469.45p -1.10% HSBC Holdings (HSBA) 493.25p -1.08% Rio Tinto (RIO) 5,625.00p -0.97%

FTSE 250 - Risers

Mitchells & Butlers (MAB) 153.50p 8.10% Redde Northgate (REDD) 390.50p 4.55% Edinburgh Worldwide Inv Trust (EWI) 182.80p 3.86% Indivior (INDV) 1,718.00p 2.75% Home Reit (HOME) 52.20p 2.35% Paragon Banking Group (PAG) 494.80p 1.77% Bank of Georgia Group (BGEO) 2,680.00p 1.71% Mitie Group (MTO) 75.20p 1.48% Hikma Pharmaceuticals (HIK) 1,538.50p 1.35% Lancashire Holdings Limited (LRE) 613.00p 1.32%

FTSE 250 - Fallers

Moonpig Group (MOON) 134.80p -10.85% Baltic Classifieds Group (BCG) 134.40p -7.05% Pagegroup (PAGE) 437.60p -5.85% Synthomer (SYNT) 129.40p -2.56% Tullow Oil (TLW) 39.50p -2.47% Weir Group (WEIR) 1,715.00p -2.28% Johnson Matthey (JMAT) 2,092.00p -1.97% Target Healthcare Reit Ltd (THRL) 76.00p -1.94% Fidelity China Special Situations (FCSS) 233.00p -1.89% AJ Bell (AJB) 362.20p -1.84%