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LONDON MARKET CLOSE: Pharma stocks fail to lift FTSE 100 in the green

7th Dec 2022 17:25

(Alliance News) - Stocks in London closed in the red on Wednesday, despite a strong performance from pharmaceutical stocks, as investors digested a raft of economic data from both China and Europe.

The FTSE 100 index closed down 32.20 points, or 0.4% at 7,489.19. The FTSE 250 ended down 169.51 points, or 0.9%, at 18,930.57, and the AIM All-Share closed down 5.66 points, or 0.7%, at 834.53.

The Cboe UK 100 ended down 0.4% at 750.61, the Cboe UK 250 closed down 0.9% at 16,385.48, and the Cboe Small Companies ended down 0.5% at 13,137.91.

China's imports and exports plunged in November to levels not seen since early 2020.

November imports fell 11% year-on-year, the biggest collapse since May 2020. Exports fell by 8.7% year-on-year, the biggest drop since February 2020, when the country was mired in the early stages of the pandemic. 

After nationwide anti-lockdown protests last week, the government has signalled a shift in messaging and local authorities have begun easing some restrictions – which may brighten the outlook in the coming months.

But travel between provinces remains complicated, and an economic recovery may take time, with health measures highly variable across the country. 

"On the one hand, investors are keen to celebrate the move away from zero-Covid with new relaxation measures being announced on an almost daily basis. On the other, the economic data has been pretty dreadful and the trade data overnight captures both its domestic struggles and the global decline," said Craig Erlam at Oanda.

Meanwhile, eurozone data revealed growth in the single currency area's economy, with gross domestic product growth higher than previous estimates, and employment ticking up.

On an annual basis, GDP rose 2.3% in the third quarter. It topped a previous estimate of 2.1%, but slowed from 4.2% annual growth in the previous quarter.

Despite the stronger-than-expected print, several analysts believe the eurozone economy is not yet safe from recession.

"High energy prices, tight financial conditions and weak global demand are significant headwinds to near-term growth, and we expect the region to enter a mild recession over the winter before rebounding gradually in H2 2023," said Rory Fennessy, economist at Oxford Economics.

In European equities on Wednesday, the CAC 40 in Paris ended down 0.4%, while the DAX 40 in Frankfurt ended down 0.6%.

In London, GSK finished the session as the best FTSE 100 performer, closing 15% higher.

Late on Tuesday, the pharmaceutical firm welcomed a US verdict in a lawsuit which had claimed the Zantac heartburn drug caused cancer.

The Florida lawsuit featured roughly 50,000 claims. However, the court said plaintiffs failed to provide enough "admissible primary evidence".

"Yesterday's ruling reflects the state of that science and ensured that unreliable and litigation-driven science did not enter the federal courtroom... GSK will continue to defend itself vigorously, including against all claims brought at the state level," GSK said.

GSK was closely followed by its consumer healthcare spinoff, Haleon, which closed up 8.2%. Haleon also had exposure to the Zantac litigation, as did Sanofi, which finished 6.1% higher in Paris.

AstraZeneca was up 1.4% after reporting its Enhertu drug achieved statistically significant overall survival in breast cancer patients in a recent trial.

AstraZeneca said results from its Destiny-Breast03 Phase 3 trial showed that Enhertu demonstrated a 36% reduction in the risk of death in patients with HER2-positive metastatic breast cancer, compared to trastuzumab emtansine, which is another cancer drug.

The Cambridge-based pharmaceutical firm develops Enhertu with its Tokyo-based partner Daiichi Sankyo.

In the FTSE 250, Mitchells & Butler climbed 11% after it reported a swing to profit in the year ended September 24.

The pub, bar and restaurant operator said its pretax profit was GBP8 million, swung from a loss of GBP42 million a year earlier. Its revenue more than doubled to GBP2.21 billion from GBP1.07 billion.

"Excluding the impact of utilities, profits broadly recovered to pre-Covid-19 levels," Mitchells & Butler said.

Indivior was up 5.8% after it said it aims to list on the Nasdaq in spring 2023 and expects its injection Sublocade to achieve a net revenue run rate of USD1 billion by the end of 2025.

"Having carefully evaluated the available options, Indivior has chosen Nasdaq as its US trading venue. The additional listing is expected to elevate Indivior's profile in the company's largest market and to attract a broader group of biopharma-focused investors and analysts," the pharmaceutical firm said.

Moonpig plunged 8.9% as the online greeting card and gifting company said interim profit was cut in half as expenses ballooned.

In the six months ended October 31, Moonpig's pretax profit fell to GBP9.1 million from GBP18.7 million a year prior. Revenue stayed almost flat at GBP142.8 million, compared to GBP142.6 million, as selling & administrative costs widened by 34% to GBP63.0 million from GBP47.0 million.

Stocks in New York were lower at the London equities close, with the Dow Jones down just 7.68 points, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.4%.

The US dollar was mixed amid a backdrop of uncertainty about the next moves for a number of central banks next week.

The pound was quoted at USD1.2194 at the London equities close Wednesday, lower compared to USD1.2243 at the close on Tuesday.

The euro stood at USD1.0506 at the European equities close Wednesday, slightly lower against USD1.0519 at the same time on Tuesday.

Against the yen, the dollar was trading at JPY136.56, up compared to JPY136.46 late Tuesday.

"While no one is expecting anything other than 50 [basis point] rate hikes next week when we get the Federal Reserve, European Central Bank and the Bank of England all set to meet within 24 hours of each other, it is what comes after that which is causing increased speculation," said CMC Market's Michael Hewson.

The Bank of Canada increased its policy interest rates by 50 basis points on Wednesday. The central bank raised its target for the overnight rate to 4.25%, with the bank rate at 4.50%, and the deposit rate at 4.25%.

The hike was in-line with FXStreet-cited market consensus.

The Bank of England, the European Central Bank and the US Federal Reserve will all announce their own interest rate decisions next week.

Brent oil was quoted at USD78.00 a barrel at the London equities close Wednesday, from USD80.35 late Tuesday. Gold was quoted at USD1,783.10 an ounce at the London equities close Wednesday, against USD1,774.71 at the close on Tuesday.

In Thursday's UK corporate calendar, there are trading statements from construction firm Balfour Beatty and cigarette maker British American Tobacco. There will also be half-year results from online estate agent Purplebricks and retailer Frasers Group.

The economic calendar has CPI data from Ireland at 1100 GMT.

By Heather Rydings, Alliance News senior economics reporter

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