Stock markets were rising on Tuesday, after Chinese authorities smothered protests against Covid-19 restrictions but also said they would step up efforts to vaccinate the country’s older population, which could help end its endless cycle of lockdowns.
The FTSE 100 index opened up 64.88 points, 0.9%, at 7,538.90. The FTSE 250 was up 11.98 points, 0.1%, at 19,304.33, while the AIM All-Share was down 1.52 points, or 0.2% at 849.40.
The Cboe UK 100 was up 0.8% at 753.71, the Cboe UK 250 was down 0.2% at 16,700.37, and the Cboe Small Companies was up 0.6% at 13,219.22.
In Europe, the CAC 40 index in Paris was up 0.3% and the DAX 40 in Frankfurt was up 0.1%.
China’s major cities of Beijing and Shanghai were blanketed with security in the wake of nationwide rallies calling for political freedoms and an end to Covid lockdowns.
The country’s leadership is facing a wave of protest not seen in decades, fuelled by anger over the unrelenting lockdowns as well as deep-rooted frustrations over China’s political direction.
With police cars, foot patrols, a network of surveillance cameras, and aided by the icy wind, Beijing authorities appeared to have deterred fresh gatherings.
In semi-autonomous Hong Kong, however, where mass democracy protests erupted in 2019, dozens gathered at the Chinese University to mourn the victims of the Urumqi fire. The demonstrators said Covid restrictions were to blame for hampering rescue efforts of the deadly fire.
As the police cracked down on protesters, stocks in China closed firmly in the green on Tuesday. The Shanghai Composite closed up 2.3%, and the Hang Seng in Hong Kong added 5.2%. They had ended down 0.8% and 1.6%, respectively, on Monday.
The Nikkei 225 in Tokyo ended up 0.5% and the S&P/ASX 200 in Sydney closed up 0.3%.
News that China said it would speed up a push to vaccinate people aged 60 and older against Covid-19 also helped to boost Asian stocks and investor confidence elsewhere.
In London, AstraZeneca agreed to acquire Neogene Therapeutics, a clinical stage biotechnology company focused on the discovery, development and manufacturing of T-cell receptor therapies for the treatment of cancer.
AstraZeneca said it will pay up to $320 million. This will include an initial cash payment of $200 million upon closing and a further $120 million, contingent on the meeting of unspecified milestones.
Shares in AstraZeneca were up 0.7%
FTSE 250-listed healthcare sector investor Syncona, which holds an 8% stake in Neogene, said it will receive $16 million from Astra’s initial payment.
Shares in Syncona were up 1.2%.
easyJet reported a ‘record bounce back’ in the year ended September 30, with a sharp rise in annual revenue and a significantly narrowed loss.
The low-cost airline’s pretax loss narrowed to £208 million from £1.04 billion the previous year, as revenue multiplied to £5.77 billion from £1.46 billion the year prior.
easyJet credited the relaxation of pandemic restrictions and an increase in ancillary products for the revenue rise.
Shares in the airline were down 5.4% at 375.14 pence.
Liberum kept a ’buy’ rating on the stock with a 430p target. ‘The current rating more than reflects the external risks, while giving little credit for the strategic progress made by the group,’ said analyst Gerald Khoo.
John Wood said its trading in the first ten months of 2022 was in line with its expectations. As a result, the company confirmed its full-year guidance.
It expects annual revenue between $5.2 billion and $5.5 billion, with adjusted earnings before interest, tax, depreciation and amortisation around the middle of its guidance range of $370 million and $400 million.
The guidance saw John Wood plummet 12% in early morning trade.
Elsewhere, Treatt announced a rise in annual revenue but a fall in profit amid negative impacts from Covid restrictions in China, volatile currency movements, and cost inflation.
In the financial year that ended September 30, the ingredient supplier for the beverage, flavour and fragrance industry reported a pretax profit of £16.2 million, down from £19.6 million the previous year.
Cost of sales jumped to £101.1 million from £82.1 million, offsetting revenue which grew to £140.2 million from £124.3 million.
Shares in Treatt were down 1.6%.
The pound was quoted at $1.2027 early Tuesday in London, a touch higher from $1.2025 at the London equities close on Monday. Against the yen, the dollar was trading at JP¥138.20, down from JP¥138.89.
The euro stood at $1.0368 shortly after the European equities open on Tuesday morning, lower against $1.0377 late Monday.
For ING’s Francesco Pesole, the key for the US dollar moving forward will be Wednesday’s speech by Fed Chair Jerome Powell, in which Pesole sees a ‘higher likelihood that he will sound hawkish’, and US jobs data due on Friday.
This is because this may cause the Fed’s ‘communicated and perceived narrative to drift away from dovish pivot expectations’.
Ipek Ozkardeskaya added: ‘There is still hope that Fed President Jerome Powell talks about slower rate hikes at his speech this week, but again, his words shouldn’t be heard halfway through. The Fed is willing to slow the pace of rate hikes to avoid going too far. But if they slow down, it’s also because they want to go higher than 5%.’
St Louis Federal Reserve President James Bullard affirmed on Monday that he believes the Federal Reserve will need to lift the federal funds rate to at least the bottom of a 5% to 7% range.
The benchmark rate is currently 3.75% to 4.00%.
Bullard’s hawkishness was echoed by European Central Bank President Christine Lagarde who also signalled further interest rate hikes to come to come on Monday.
‘I would like to see inflation having peaked in October but I’m afraid that I would not go as far as that,’ Lagarde told European lawmakers in Brussels.
Lagarde said the ECB has been hiking ‘at the fastest pace ever’ and that more increases would be needed to bring inflation back down to the ECB’s two-percent target.
‘We still have a way to go and we’re not done with inflation so, yes, we will continue to raise interest rates,’ Lagarde said.
Gold fetched $1,752.70 an ounce, higher against $1,743.16. Brent oil was quoted at $85.35 a barrel early Tuesday, up from $82.84 late Monday.
Still to come on Tuesday, there’s a provisional CPI reading from Germany at 1300 GMT.
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