MARKET REPORT: New Year cheer as Footsie gets off to a flying start

The London stock market enjoyed some New Year’s cheer as hopes around the lifting of China’s Covid restrictions outweighed fears over the health of the UK and the global economy.

Starting 2023 on a positive note, the FTSE 100 gained 1.4 percent, or 102.35 points, to 7554.09 and the FTSE 250 also rose 1.5 percent, or 281.34 points, to 19134.34.

The gains were mirrored in Europe with the Dax up 0.8 percent in Frankfurt and the Cac up 0.4 percent in Paris.

But Wall Street traders were more cautious. The Dow Jones Industrial Average fell 0.03 percent, the S&P 500 fell 0.4 percent and the tech-heavy Nasdaq fell 0.8 percent.

It is hoped that the lifting of pandemic restrictions in China will boost the world’s second-largest economy once Covid cases ease.

But there is also fear about the strength of economies around the world, with figures showing production in UK and Chinese factories is declining in December.

Hargreaves Lansdown analyst Susannah Streeter said: ‘The FTSE 100 has defied expectations of a muted start to the year with a big spring in its step, which shrugged off warnings from the International Monetary Fund about future challenges in 2023.

Despite a sharp contraction in activity in China last month, traders are hopeful that the situation will improve.

Looking forward rather than backward, traders are seizing a glimmer of hope that once the winter waves have subsided, China’s recovery can get back on track.”

It’s been a roller coaster ride for Cineworld after the world’s second largest cinema chain denied it was in talks with Odeon owner AMC Entertainment about selling one of its locations.

The company, which has started bankruptcy proceedings in the US, insisted it would not sell the assets separately, but instead wanted to sell the group as a whole.

The stock crashed about 20 percent in early trading before gaining 0.8 percent, or 0.03 pence, to 3.67 pence.

Investors in Rolls-Royce cheered after Jefferies upgraded the jet engine maker’s rating from “hold” to “buy” and raised its price target from 90 pence to 125 pence.

Shares rose 6.1 percent, or 5.71p, to 98.91p. But the broker was less enthusiastic about SSE and downgraded the energy company from ‘buy’ to ‘hold’ and lowered the target price from 2080 pence to 1830 pence. Shares fell 2.8 percent, or 48.5 pence, to 1663.5 pence.

Losses trickled through the industry with British gas owner Centrica up 4.8 percent, or 4.58 pence, to 91.94 pence and energy company Drax up 4.5 percent, or 31.5 pence, to 671.5 pence.

Hotel Chocolat was well received by the market with shares rising 8 percent or 12.5 pence to 168 pence after the luxury confectioner closed a joint venture in Japan.

The partnership with Tokyo-based Eat Creator Corporation includes 21 Hotel Chocolat brand stores across Japan.

But investors are hoping for a better return this time around, as Hotel Chocolat wrote off around £22m last year after its previous partnership in Japan took a turn for the worse.

Inchcape completed the acquisition of Derco, the largest car distributor in Latin America, for £1.3 billion.

The car dealer also reiterated that profit for 2022 would be “towards the upside, or slightly above the previously estimated range” of £350m-£370m. Shares rose 2.3 percent, or 19 pence, to 839 pence.

The saga surrounding the former boss of Ferrexpo, the Ukrainian iron ore miner’s largest shareholder, took another turn after he submitted his letter of resignation to step down as a board member.

Last week, Kostyantyn Zhevago, 48, who owns 50.3 percent of the FTSE 250 firm, was arrested in France at the request of Ukraine on charges of money laundering and embezzlement.

Shares added 3.6 percent or 5.6 pence to 162.8 pence.