London open: FTSE edges up as pharmas rally; US govt shutdown in focus

(Sharecast News) - London stocks edged higher in early trade on Wednesday, underpinned by strength in the pharmaceuticals sector, as investors mulled a shutdown of the US federal government after Republicans and Democratics failed to reach a funding deal. At 0830 BST, the FTSE 100 was up 0.2% at 9,368.97, having earlier hit a fresh high of 9,388.

Richard Hunter, head of markets at Interactive Investor, said: "Washington may have turned the lights out, but investors bypassed the political noise to send the Dow Jones to a new record high.

"Nonetheless, there are some implications which are difficult to avoid, such as the possibility of mass layoff of federal workers which would put extra strain on an already anaemic labour market. Apart from the fact that the non-farm payrolls report may not now be released on Friday, which hampers the Fed's visibility on the latest state of play, any shutdown lasting more than the usual couple of weeks would leave some shifting uncomfortably in their chairs.

"In the meantime and by default, other employment data takes on extra significance. The job openings report yesterday highlighted weakness in hiring new staff, while today's ADP report could highlight further weakness with the addition of a modest 50000 jobs expected.

"The beginning of the new quarter will also herald a number of new tariffs coming into force, including patented drugs and large trucks. It appears that tariff collections will continue despite any shutdown, which will keep inflationary fears in play for investors and indeed the Federal Reserve itself."

On home turf, the latest data from Nationwide showed that house prices nudged higher in September, as the market continued to shake off wider economic uncertainty.

The average house price now stands at £271,995, having risen 0.5% month-on-month, reversing August's 0.1% dip. Consensus had been for a 0.2% uplift.

Year-on-year, house prices rose by 2.2%, little changed on August's 2.1% but ahead of forecasts for a 1.8% rise.

Robert Gardner, Nationwide's chief economist, said: "Despite ongoing uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.

"Unemployment is low, earnings are rising at a healthy pace, household balance sheets are strong and borrowing cost are likely to moderate a little further if Bank Rate is lowered in the coming quarters as we, and most other analysts, expect."

In equity markets, pharmaceuticals were the standout gainers, with AstraZeneca, Hikma, GSK and Haleon all higher. The gains came as Pfizer shares surged after it struck a deal with US President Donald Trump to cut US drug prices.

JPMorgan said in a research note: "Overall, we see Pfizer's agreement on Most Favoured Nation as a potential bellwether for the sector which, we anticipate is likely to be replicated by EU Pharma companies and should therefore result in a broadly manageable impact from MFN on EU Pharma, reassuring investors."

Trump also announced plans on Tuesday to launch a government-run website, dubbed TrumpRx, for consumers to buy drugs directly from manufacturers.

Greggs surged as the bakery chain reported a slowdown in sales, pinning the blame partly on a "heat-affected" July, but reiterated its outlook for the full year.

Taylor Wimpey was little changed as the housebuilder reiterated its guidance for 2025 after a "robust" sales performance over the third quarter, but said it was mindful of various issues currently affecting customer sentiment, such as the impact of the delayed autumn budget.

Tate & Lyle tanked as it downgraded its full-year profit and revenues expectations.

Howden Joinery slumped after shareholder Invesco Asset Management placed about 20.1m shares in the company at 825p each. According to Bloomberg, the shares were placed via BofA Securities.

The placing price was a 2.2% discount to the closing share price on Tuesday.

Market Movers

FTSE 100 (UKX) 9,368.97 0.20% FTSE 250 (MCX) 21,930.08 -0.39% techMARK (TASX) 5,449.20 -0.07%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 1,767.00p 4.06% AstraZeneca (AZN) 11,562.00p 3.40% GSK (GSK) 1,597.00p 1.43% Diageo (DGE) 1,793.00p 0.99% JD Sports Fashion (JD.) 96.18p 0.92% Haleon (HLN) 335.30p 0.87% Smith & Nephew (SN.) 1,348.00p 0.79% Croda International (CRDA) 2,725.00p 0.78% BP (BP.) 429.00p 0.76% Convatec Group (CTEC) 233.00p 0.69%

FTSE 100 - Fallers

Flutter Entertainment (DI) (FLTR) 18,685.00p -3.39% Rightmove (RMV) 694.40p -2.00% Entain (ENT) 858.60p -1.74% Rolls-Royce Holdings (RR.) 1,175.00p -1.26% ICG (ICG) 2,198.00p -1.26% International Consolidated Airlines Group SA (CDI) (IAG) 381.40p -1.22% Auto Trader Group (AUTO) 778.80p -1.19% BT Group (BT.A) 189.00p -1.12% Babcock International Group (BAB) 1,316.00p -1.05% Bunzl (BNZL) 2,322.00p -1.02%

FTSE 250 - Risers

Greggs (GRG) 1,715.00p 6.92% Rank Group (RNK) 142.00p 2.45% Helios Towers (HTWS) 152.20p 2.15% Close Brothers Group (CBG) 503.00p 1.82% THG (THG) 38.00p 1.28% Harworth Group (HWG) 172.00p 1.18% Hill and Smith (HILS) 2,060.00p 0.73% Hochschild Mining (HOC) 358.00p 0.73% Pantheon International (PIN) 346.00p 0.73% PayPoint (PAY) 756.00p 0.67%

FTSE 250 - Fallers

Tate & Lyle (TATE) 417.40p -7.16% Computacenter (CCC) 2,614.00p -2.68% SDCL Efficiency Income Trust (SEIT) 55.10p -2.65% Howden Joinery Group (HWDN) 822.00p -2.55% IntegraFin Holding (IHP) 340.50p -1.87% Me Group International (MEGP) 182.00p -1.73% RS Group (RS1) 559.50p -1.58% AJ Bell (AJB) 533.00p -1.57% Carnival (CCL) 1,948.00p -1.49% Caledonia Investments (CLDN) 373.00p -1.45%