London open: FTSE heads higher; Glaxo paces advance on deal news
London stocks rose in early trade on Monday, with pharmaceuticals giant GlaxoSmithKline pacing the advance after confirming it had rejected an offer from Unilever for its consumer healthcare arm.
At 0840 GMT, the FTSE 100 was up 0.6% at 7,591.46.
Investors were mulling a survey out earlier showing that UK house prices continued to rise in January, marking the busiest start to the year on record.
According to the latest Rightmove House Price Index, the average price of property coming to market rose by 0.3% in January from December, to £341,019. That is 7.6% higher than January 2021, and the highest annual rate of price growth recorded by Rightmove since May 2016.
Rightmove said it was the busiest ever start to a new year, driven by ongoing strong demand and weak supply. Buyer enquiries surged by 15% year-on-year, while the number of available homes for sale per estate agency branch dropped to just 12.
First-time buyer asking prices hit £214,174, a month-on-month jump of 1.4% and a fresh record. Prices are now 6.8% up on January 2021.
Tim Bannister, director of property data at Rightmove, said: "New Year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market.
"These early-bird sellers who got themselves ready to come to market are now benefiting from the busiest start to the year that we’ve recorded.
"All the signs suggest that prices are likely to continue to rise until more choice is available.
"It is clear that the trends which defined the market in 2021 have carried over into this year."
However, looking ahead, Bannister said there were "early signs" of a better balanced market in 2022. The number of requests from would-be sellers to agents increased in January, and was at one of the highest points ever on the first working day of the year.
In equity markets, GlaxoSmithKline surged after revealing it had rebuffed a £50bn offer from Unilever for its consumer healthcare business - a joint venture with Pfizer. Unilever shares slid. Glaxo said it had rejected three proposals from Unilever, all of which "fundamentally undervalued" the business and its future prospects.
CMC Markets analyst Michael Hewson said Glaxo was no doubt hoping that Unilever will come back with a higher offer, "with the sum of £60bn being bandied about according to some estimates".
"A deal between GlaxoSmithKline for its consumer healthcare business would undoubtedly be a good fit for Unilever, and it’s a little surprising that they haven’t ripped Unilever’s arm off at £50bn, as it’s a decent price, with the only question being as to whether it’s the right one," he said. "It might be for GlaxoSmithkline and Pfizer, however there is a feeling that for Unilever it could well prove to be too high a price.
"Perhaps GSK think they can get Unilever to come in with a higher bid, or perhaps get a higher valuation by way of a spin-off? This is by no means certain and with the Unilever share price sliding sharply this morning it would appear that the markets have made up their mind, with GlaxoSmithKline shares going higher."
Elsewhere, Taylor Wimpey gained after the housebuilder said it was is set to meet its annual targets following an "excellent" year, and pledged to return excess cash to shareholders.
Hikma Pharmaceuticals was up after agreeing to buy the Canadian assets of Teligent for $45.75m after the US firm filed for Chapter 11 bankruptcy last year.
Antofagasta was also in the black after UBS upgraded shares of the Chilean copper miner to ‘neutral’ from ‘sell’ and lifted the price target to 1,400p from 1,300p as it said the risk/reward was more balanced after recent underperformance.
Asset manager Ashmore fell after it posted a drop in second-quarter assets under management, citing weaker emerging markets.
FTSE 100 - Risers
GlaxoSmithKline (GSK) 1,727.40p 5.27%
Antofagasta (ANTO) 1,427.50p 3.52%
Informa (INF) 568.00p 2.16%
ITV (ITV) 120.20p 1.95%
BAE Systems (BA.) 590.80p 1.90%
Smith & Nephew (SN.) 1,284.00p 1.86%
Reckitt Benckiser Group (RKT) 6,309.00p 1.84%
Admiral Group (ADM) 3,168.00p 1.83%
Compass Group (CPG) 1,749.00p 1.77%
WPP (WPP) 1,209.50p 1.77%
FTSE 100 - Fallers
Unilever (ULVR) 3,705.00p -5.88%
Dechra Pharmaceuticals (DPH) 4,170.00p -0.71%
Ocado Group (OCDO) 1,435.00p -0.69%
National Grid (NG.) 1,076.20p -0.44%
Croda International (CRDA) 8,394.00p -0.36%
Berkeley Group Holdings (The) (BKG) 4,446.00p -0.25%
B&M European Value Retail S.A. (DI) (BME) 563.60p -0.21%
Rightmove (RMV) 691.60p -0.17%
Avast (AVST) 602.00p -0.17%
Flutter Entertainment (CDI) (FLTR) 11,260.00p -0.13%
FTSE 250 - Risers
RHI Magnesita N.V. (DI) (RHIM) 3,676.00p 2.62%
Euromoney Institutional Investor (ERM) 914.00p 2.12%
Cineworld Group (CINE) 41.18p 2.06%
Endeavour Mining (EDV) 1,610.00p 1.90%
Carnival (CCL) 1,522.20p 1.78%
Wood Group (John) (WG.) 246.70p 1.77%
BlackRock Smaller Companies Trust (BRSC) 2,065.00p 1.72%
Energean (ENOG) 924.50p 1.59%
QinetiQ Group (QQ.) 273.20p 1.56%
Tate & Lyle (TATE) 729.00p 1.48%
FTSE 250 - Fallers
AVI Global Trust (AGT) 216.00p -79.58%
Darktrace (DARK) 412.40p -7.24%
Trustpilot Group (TRST) 233.20p -4.03%
FDM Group (Holdings) (FDM) 1,152.00p -2.87%
Ashmore Group (ASHM) 281.20p -2.83%
Countryside Properties (CSP) 344.20p -2.49%
Baillie Gifford Shin Nippon (BGS) 188.60p -2.28%
Volution Group (FAN) 499.50p -2.25%
Oxford Biomedica (OXB) 995.00p -2.07%
PZ Cussons (PZC) 196.20p -1.70%