LONDON BRIEFING: Stocks called higher; China… – Morningstar

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(Alliance News) – Stocks in London are expected to start a new year on the front foot on Tuesday, after a mixed session in Asia amid weak Chinese economic data.
China’s manufacturing activity contracted sharply in December for the third month in a row, according to an official survey released on Saturday, despite Beijing’s loosening of Covid restrictions at the beginning of the month.
The purchasing managers’ index came in at 47 points, down from November’s 48 and well below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics.
Released on Monday, the Caixin manufacturing PMI reading was only slightly better, slipping to 49.0 points in December from 49.4 in November.
“China will…be facing a ‘tough year’ – even the sudden U-turn from the Covid zero policy won’t be enough to boost growth, as the incredibly disastrous management of both pandemic, and the exit from pandemic measures cause hundreds of millions of infections at the same time, and millions of death… and you can see the ravage in economic data,” said Swissquote Bank’s Ipek Ozkardeskaya.
In early UK corporate news, Hikma Pharmaceutical shares received a broker upgrade from JPMorgan and launched a new generic drug, while Cineworld put itself up for sale.
In the economic calendar on Tuesday, there are manufacturing PMIs from the UK at 0930 GMT and the US later in the day. The German consumer price index is at 1300 GMT, with unemployment figures to be released shortly.
Here is what you need to know ahead of the London market open:
FTSE 100: called up 27.8 points, 0.4%, at 7,479.54
Hang Seng: up 1.7% at 20,110.01
Nikkei 225: Tokyo closed for holiday after New Year’s Day
S&P/ASX 200: closed down 1.3% at 6,946.20
DJIA: closed down 73.55 points, 0.2%, at 33,147.25
S&P 500: closed down 0.3% at 3,839.50
Nasdaq Composite: closed down 0.1% at 10,466.48
EUR: lower at USD1.0658 (USD1.0686)
GBP: higher at USD1.2072 (USD1.2054)
USD: lower at JPY129.89 (JPY131.84)
GOLD: higher at USD1,847.31 per ounce (USD1,818.60)
OIL (Brent): higher at USD86.15 a barrel (USD83.21)
(changes since previous London equities close)
Tuesday’s key economic events still to come:
09:55 CET Germany unemployment
14:00 CET Germany consumer price index
09:30 GMT UK S&P Global-CIPS manufacturing PMI
09:45 EST US manufacturing PMI
UK rail passengers will face fresh travel disruption from Tuesday as tens of thousands of workers take strike action in bitter disputes over pay, jobs and conditions. Members of the Rail, Maritime and Transport union at Network Rail and 14 train operators will stage two 48-hour walkouts from Tuesday and Friday, while drivers in the Aslef union will strike on Thursday. Passengers, including those returning to work after the festive break, are being warned to expect “significant disruption” as only a limited number of trains will run.
The AIB Ireland manufacturing PMI remained steady at 48.7 points in December, still in contraction territory for a second month. “Orders have been in decline since June reflecting weakening demand,” commented Oliver Mangan, AIB chief economist. This has resulted in the downturn in manufacturing activity seen in the closing two months of the year.”
Ireland’s property market proved to be resilient to cost-of-living fears and external pressures throughout last year, a new report has said. The quarterly house price report found the market had held up better than evidence had suggested in 2022. The number of vendors cutting asking prices remained at low levels, while house prices were being settled above asking prices. However, the report warned that the resilience of the housing marking is set to be tested this year. The report found annual asking price inflation slowed to 6% nationwide, and was 3.6% in Dublin and 7.6% elsewhere around the country.
Redburn raises CRH to ‘buy’ (neutral)
JPMorgan cuts GSK to ‘underweight’ (neutral) – price target 1350 (1600) pence
JPMorgan raises Hikma Pharmaceuticals to ‘overweight’ (neutral) – price target 1950 (1760) pence
Hikma has launched an authorised generic version of Xyrem1 oral solution CIII from Jazz Pharmaceuticals, which is generically sodium oxybate. Jazz reported net sales of USD1.3 billion for Xyrem in 2021.
Inchcape said it has completed the GBP1.3 billion acquisition of Derco, first announced back in July. The automotive distribution firm said the acquisition will expand its leadership in Latin America, with Derco previously being the largest independent automotive distributor in the region. “The combination brings together two best-in-class operators in highly attractive and fast growth markets within Latin America, and significantly expands our [original equipment manufacturer] brand portfolio,” CEO Duncan Tait said.
Wizz Air said it carried 4.2 million passengers in December 2022, a 58% increase year-on-year, with a load factor of 85%, compared to 75% a year prior. On a rolling 12-month basis, it carried 45.7 million passengers – over double that of 21.7 million in the previous 12-month period. The Budapest-based budget airline noted its new routes from Italy to Saudi Arabia, as well as the opening of routes from Austria to Saudi Arabia during the month.
Beleaguered cinema chain Cineworld has put itself up for sale. Responding to recent media reports, the firm said that neither it, nor its lenders and advisors, have participated in discussions with US rival AMC Entertainment regarding any sales of its assets. Starting from this month, however, it will run a marketing process, focused on proposals for the group as a whole. This will run in parallel to the developing of a plan for a chapter 11 reorganisation, Cineworld said. “As previously announced, it is expected that any restructuring or sale transaction agreed with stakeholders will result in a very significant dilution of existing equity interests in Cineworld,” it reiterated.
Reneuron said its chief executive officer, Catherine Isted, has stepped down with immediate effect. Board member Iain Ross has been appointed as executive chair and will lead a restructuring of the business. Ross is an “experienced industry executive who has led several successful biotech turnarounds”, the stem-cell-focused firm said. This includes recent appointments at Redx Pharma and Silence Therapeutics. Reneuron will provide further announcements in due course.
By Elizabeth Winter, Alliance News senior markets reporter
Comments and questions to [email protected]
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