London open: Stocks edge down as hopes of China Covid curb relaxation fade

London stocks edged lower in early trade on Monday after Chinese officials poured cold water on hopes that China will relax its Covid restrictions.

At 0845 GMT, the FTSE 100 was down 0.2% at 7,319.28.

Richard Hunter, head of markets at Interactive Investor, said: "Asian markets lost some steam as Chinese authorities denied that it was considering easing its zero-tolerance Covid-19 policy.

"Despite the statement from the authorities, it is believed that the continuing weakness of the Chinese economy could yet prompt an easing of the policy in the New Year."

Hunter said the Chinese denial set the tone in the UK. "In early exchanges, the miners gave up some of those gains which helped pull the index lower, given its significant exposure to energy in general, while Asian-focused companies also saw some weakness.

"The energy exposure has been something of a blessing and a curse this year on wavering prices and potential demand, although overall a loss for the FTSE 100 in the year to date of just 1% remains a robust performance in comparison to many global peers."

Disappointing Chinese trade figures added to the downbeat tone. They showed that exports came in worse than expected in October, dragged down by a drop in exports to the EU and softening global demand.

The trade balance rose to $85.2bn from $84.7bn in September, versus consensus expectations of $96bn.

Exports rose 0.3% year-over-year in October, down from 5.7% growth a month earlier and well below consensus expectations of 4.5% growth. Meanwhile, imports rose 0.7% following a 0.3% jump in September. Economists had been expecting no growth.

On home shores, data from mortgage lender Halifax showed house prices in fell in October at the fastest monthly rate since February 2021 amid rising mortgages rates and a downbeat outlook.

Prices declined by 0.4% on the month following a 0.1% dip in September. On the year, meanwhile, house prices were down 8.3% in October following a 9.8% fall a month earlier. A typical UK property now costs £292,598 - a five-month low - down from £293,664 in September.

Kim Kinnaird, director of Halifax Mortgages, said: "While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases. While it is likely that those rates have peaked for now - following the reversal of previously announced fiscal measures - it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.

"Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and demand for borrowing declining. The rising cost of living coupled with already stretched mortgage affordability is expected to continue to weigh on activity levels. With tax rises and spending cuts expected in the Autumn Statement, economic headwinds point to a much slower period for house prices."

In equity markets, GSK slumped after saying that its blood cancer drug, Blenrep, failed to meet the main goal of a late-stage study.

B&Q owner Kingfisher was knocked lower by a downgrade to ‘neutral’ at Credit Suisse.

On the upside, Mike Ashley’s Frasers Group rallied as it launched a share buyback programme and following a report the company is among bidders for Made.com.

Paddy Power owner Flutter Entertainment advanced after a New York arbitrator sided with the company in its spat with Fox over FanDuel. Entain also gained.

Energean gushed higher after saying that its Zeus-01 exploration well off the coast of Israel had made a commercial gas discovery of 13bn cubic metres of gas and was conducting post-well analysis of its find.

Market Movers

FTSE 100 (UKX) 7,319.28 -0.21%
FTSE 250 (MCX) 18,359.80 0.10%
techMARK (TASX) 4,276.11 -0.17%

FTSE 100 - Risers

Flutter Entertainment (CDI) (FLTR) 11,910.00p 3.48%
Frasers Group (FRAS) 688.00p 3.07%
Entain (ENT) 1,315.00p 2.41%
Ocado Group (OCDO) 647.20p 2.08%
Harbour Energy (HBR) 415.50p 1.69%
Sainsbury (J) (SBRY) 211.90p 1.53%
Smurfit Kappa Group (CDI) (SKG) 2,979.00p 1.26%
SSE (SSE) 1,595.50p 1.08%
International Consolidated Airlines Group SA (CDI) (IAG) 126.26p 1.02%
Fresnillo (FRES) 762.80p 0.93%

FTSE 100 - Fallers

Kingfisher (KGF) 219.70p -2.92%
GSK (GSK) 1,406.80p -2.68%
Rolls-Royce Holdings (RR.) 83.10p -2.36%
Taylor Wimpey (TW.) 95.14p -1.47%
Prudential (PRU) 901.40p -1.34%
Persimmon (PSN) 1,313.00p -1.28%
Halma (HLMA) 2,130.00p -1.25%
Melrose Industries (MRO) 120.05p -1.23%
Barratt Developments (BDEV) 384.20p -1.13%
Smith & Nephew (SN.) 1,036.50p -1.10%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 116.15p 3.75%
Bank of Georgia Group (BGEO) 2,510.00p 3.72%
Energean (ENOG) 1,595.00p 3.57%
Baltic Classifieds Group (BCG) 146.20p 2.52%
HGCapital Trust (HGT) 344.50p 2.38%
Hochschild Mining (HOC) 55.55p 2.30%
TI Fluid Systems (TIFS) 128.20p 1.75%
Dr. Martens (DOCS) 242.00p 1.60%
Telecom Plus (TEP) 2,230.00p 1.59%
Bytes Technology Group (BYIT) 385.00p 1.58%

FTSE 250 - Fallers

ASOS (ASC) 616.00p -2.53%
Morgan Advanced Materials (MGAM) 274.50p -2.49%
Witan Inv Trust (WTAN) 217.50p -1.58%
FDM Group (Holdings) (FDM) 622.00p -1.58%
Redrow (RDW) 434.20p -1.45%
Hipgnosis Songs Fund Limited NPV (SONG) 84.10p -1.29%
Vistry Group (VTY) 617.00p -1.28%
TP Icap Group (TCAP) 172.90p -1.20%
Morgan Sindall Group (MGNS) 1,482.00p -1.20%
Aberforth Smaller Companies Trust (ASL) 1,180.00p -1.17%