London midday: Stocks pare losses as pharma sector rallies

London stocks had pared gains by midday on Monday thanks to a strong showing in the pharmaceuticals sector, but souring relations between the US and China continued to undermine sentiment.

The FTSE 100 was down 0.3% at 5,747.33, off earlier lows.

Over the weekend, US Secretary of State Mike Pompeo reiterated previous comments from US President Donald Trump about the coronavirus originating in a research laboratory in Wuhan, China. Speaking to ABC programme ‘This Week’, Pompeo said there was "enormous evidence" that virus came from a Chinese lab. "Remember, China has a history of infecting the world, and they have a history of running substandard laboratories," he said.

"These are not the first times that we've had a world exposed to viruses as a result of failures in a Chinese lab."

Still, Pompeo agreed with US intelligence that the virus was not man-made or genetically modified.

Trump said on Thursday that he had seen evidence the pandemic originated in China.

Spreadex analyst Connor Campbell said: "The alarming spike in tension between the US and China, as Donald Trump tries to get his 2020 election campaign back on track by hurling threats at Beijing, sent the markets south early on Monday.

"Facing a recession of the likes not seen since the Great Depression of the 1930s, the President has gone on the attack in the last week or so. Trump said that another round of tariffs would be the ‘ultimate punishment’ on China, while a ban on the iFund - a government retirement account for ex-military - buying Chinese equities has been floated.

"This as Mike Pompeo, joined by Trump, seeded the idea of an international conspiracy in the minds of the American public."

In equity markets, strength in the pharmaceuticals sector helped to keep losses to a minimum, with Hikma, AstraZeneca and GlaxoSmithKline all higher.

Ocado and Just Eat - both of which are in high demand amid the lockdown - were also on the front foot.

Elsewhere, Royal Mail was the top performer on the FTSE 250 after it emerged late on Friday that Czech billionaire Daniel Kretinsky - who owns Sparta Prague football club - has bought a 5.35% stake in the company worth £85m through the Vesa Equity Investment vehicle he controls. CMC Markets analyst David Madden said "the move has sparked speculation this could be the beginning of a full-on takeover attempt".

On the downside, Carnival was the worst performer after a Bloomberg report at the end of last week suggested the US House Committee on Transportation and Infrastructure has opened an inquiry into the cruise operator’s handling of the Covid-19 outbreak.

Rolls-Royce fell following reports over the weekend that the aerospace and defence giant is preparing to cut up to 8,000 jobs as aircraft makers reduce production due to the pandemic.

Market Movers

FTSE 100 (UKX) 5,747.33 -0.27%
FTSE 250 (MCX) 15,930.27 -1.35%
techMARK (TASX) 3,486.97 -0.28%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,363.00p 4.98%
Ocado Group (OCDO) 1,683.50p 4.24%
Rentokil Initial (RTO) 478.40p 4.23%
Hargreaves Lansdown (HL.) 1,473.00p 2.65%
GlaxoSmithKline (GSK) 1,650.60p 2.45%
Croda International (CRDA) 4,864.00p 1.93%
AstraZeneca (AZN) 8,356.00p 1.88%
Experian (EXPN) 2,392.00p 1.79%
Smurfit Kappa Group (SKG) 2,482.00p 1.72%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,932.00p 1.48%

FTSE 100 - Fallers

Carnival (CCL) 906.60p -9.61%
Rolls-Royce Holdings (RR.) 286.60p -8.46%
easyJet (EZJ) 522.40p -8.03%
Melrose Industries (MRO) 90.40p -6.48%
Informa (INF) 425.10p -5.49%
InterContinental Hotels Group (IHG) 3,353.00p -5.36%
Evraz (EVR) 243.40p -5.07%
ITV (ITV) 71.14p -4.94%
International Consolidated Airlines Group SA (CDI) (IAG) 205.20p -4.56%
Centrica (CNA) 37.60p -4.03%

FTSE 250 - Risers

Royal Mail (RMG) 169.70p 6.26%
Plus500 Ltd (DI) (PLUS) 1,257.00p 3.97%
Hochschild Mining (HOC) 135.60p 3.83%
Centamin (DI) (CEY) 160.25p 3.82%
Barr (A.G.) (BAG) 500.00p 3.52%
AJ Bell (AJB) 396.50p 3.39%
FDM Group (Holdings) (FDM) 756.00p 2.44%
Dechra Pharmaceuticals (DPH) 2,764.00p 2.37%
Avast (AVST) 461.80p 2.26%
Bakkavor Group (BAKK) 71.50p 2.14%

FTSE 250 - Fallers

Cineworld Group (CINE) 52.82p -10.14%
Mitchells & Butlers (MAB) 154.60p -10.01%
Hyve Group (HYVE) 19.96p -9.27%
National Express Group (NEX) 232.60p -9.21%
Marston's (MARS) 33.76p -9.10%
G4S (GFS) 97.10p -8.27%
IWG (IWG) 211.20p -8.01%
Aston Martin Lagonda Global Holdings (AML) 51.00p -7.94%
Senior (SNR) 55.50p -7.11%
Wood Group (John) (WG.) 178.35p -7.11%