LONDON MARKET MIDDAY: Covid concerns in China drag stocks lower

(Alliance News) - Stock prices in London at midday continued to be weighed down by the worrying surge in Covid-19 cases as China swiftly re-opens from three years of strict lockdown measures.

"The good news with China's re-opening is that it should boost global growth. The bad news with China's reopening is that it will not only boost global growth, but also energy and commodity prices - hence inflation, the interest rate hikes from central banks and potentially the global Covid cases – which could then give birth to a new, and a dangerous Covid variant, which would, in return, bring the restrictive Covid measures back on the table, and hammer growth," said Ipek Ozkardeskaya at Swissquote Bank.

The FTSE 100 index was down 9.35 points, or 0.1%, at 7,487.84. The FTSE 250 was down 61.52 points, or 0.3% at 18,823.98, and the AIM All-Share was down 1.11 points, or 0.1%, at 831.17.

The Cboe UK 100 was down 0.2% at 748.97, the Cboe UK 250 down 0.4% at 16,295.30, and the Cboe Small Companies down 0.2% at 13,104.65.

Hospitals across China have been overwhelmed by an explosion of Covid cases following Beijing's decision to lift strict rules that had largely kept the virus at bay. 

On Monday, the country said it would bring an end to mandatory quarantine on arrival – prompting many jubilant Chinese citizens to make plans to travel abroad. In response, the US and a number of other countries announced they would require negative Covid tests for all travellers from mainland China.

Stocks in New York were called higher after Wednesday's steep sell-off. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.7% on Thursday. The indices closed down 1.1%, 1.2% and 1.4%, respectively, on Wednesday.

interactive investor's Victoria Scholar said continued worries about the performance of 'big tech', fears of a recession, rising interest rates, and China's complex Covid situation were weighing on Wall Street.

In London, Antofagasta fell 1.0%, after the miner reported that access to its Los Pelambres operation in Chile is being blocked by a group of people, affecting the transport of critical supplies and personnel to the mine site.

Antofagasta explained that the group is requesting compensation to clear access but added that, to date, there has been no material impact on production.

"The authorities are working to clear the blockade, and the company is engaging with them and representatives of the local communities to jointly resolve the situation," Antofagasta said.

Allergy Therapeutics plunged 52% after it said its shares will be suspended from trading next week, due to delays in completing the audit of its annual results.

Back in September, Allergy Therapeutics announced its unaudited preliminary results for the financial year that ended June 30. It sunk to a pretax loss of GBP12.7 million from a profit of GBP3.7 million the year prior. Revenue dropped to GBP72.8 million from GBP84.3 million.

"It is not aware of any material change that will be required to be made to the results, and it is actively working to finalise the audit and publication of its annual report and accounts," Allergy Therapeutics said.

Kazera Global dropped 22%. It also said its results will not be published before the end of the year, due to delays at its wholly-owned subsidiary African Tantalum.

The diamond and rare earths explorer now expects to release its results for the financial year that ended June 30 during February. As a result, its shares will be suspended from trading on AIM in London from Tuesday next week, the first trading day of 2023.

Tekcapital jumped 8.2%. It said investee Innovative Eyewear licensed outdoor brand Eddie Bauer for its smart eyewear collection through an agreement with Authentic Brands.

The company described the contract as a "multi-year, global licensing agreement", without providing financial details. The Eddie Bauer smart eyewear collection is expected to launch in 2023.

Index operator FTSE Russell revealed on Wednesday that Johnson Matthey will return to the FTSE 100 next week as part of index changes stemming from the acquisition of home repairs company Homeserve.

Johnson Matthey had been dumped from the FTSE 100 just over a year ago following an index review. Shares in the speciality chemicals firm were down 1.0% at midday on Thursday.

Early Thursday afternoon in Europe, the CAC 40 index in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.2%.

The pound was quoted at USD1.2026 at midday on Thursday in London, down a touch compared to USD1.2029 at the close on Wednesday.

The euro stood at USD1.0633, higher against USD1.0617. Against the yen, the dollar was trading at JPY133.75, lower compared to JPY134.23.

Brent oil was quoted at USD83.00 a barrel at midday in London on Thursday, up from USD82.87 late Wednesday. Gold was quoted at USD1,806.05 an ounce, higher against USD1,801.04.

Still to come on Thursday's economic calendar, there are US weekly unemployment insurance claims at 1330 GMT.

By Heather Rydings, Alliance News senior economics reporter

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