London close: Stocks turn negative amid Omicron spread fears

by | Dec 14, 2021

London stocks had turned negative by the close on Tuesday, turning negative as trading opened across the pond, as producer inflation came in hotter-than-expected in the US in November.
The FTSE 100 ended the session down 0.18% at 7,218.64, and the FTSE 250 was 0.43% weaker at 22,550.69.

Sterling was in positive territory, last trading up 0.07% on the dollar at $1.326, and gaining 0.21% against the euro to change hands at €1.1737.

“There are concerns about the rate at which the Omicron variant of the coronavirus is spreading, hence why stock markets in Europe and the US are in the red,” said Equiti Capital market analyst David Madden.

“There have been updates with regards to restrictions that have given traders cause for concern.

“New rules about socialising have been announced in Scotland, and the Italian government confirmed that all EU travellers will have to take a Covid-19 test to enter the country.”

Madden said that, compared to rules imposed at this time last year, the new constraints were light, although dealers were fearing that things could still get worse.

“The scale of the declines seen on the FTSE 100, the DAX and the Dow Jones are reasonably small when compared with the losses incurred in late November when the Omicron story hit the headlines, so that suggests the fear factor isn’t too high for now.

“It is worth remembering that stock markets registered multi-week peaks in the past week, so the sell-off seen in the last few sessions was starting from a relatively high point.”

In economic news out of the United States, producer prices rose more quickly than expected in November, amid widespread gains in various categories of goods.

According to the US Department of Labor, so-called final demand prices increased by 0.8% versus October, pushing the annual rate of increase to 9.6%.

Economists had pencilled in growth of 0.5% on the month and 9.2% year-on-year.

Food prices rose by 1.2% on the month while energy was 2.6% dearer.

But prices also bounded ahead of forecasts at the core level, which excludes the often volatile prices for food and energy, rising by 0.8% against consensus expectations for a 0.5% rise.

On home shores, the International Monetary Fund earlier urged the Bank of England to act early to curb inflation as policymakers were preparing to meet for the last time in 2021.

In its annual review of the UK economy, the IMF said the BoE had a difficult job but putting off action could allow inflation to get out of hand.

The BoE’s Monetary Policy Committee meets this week and will announce its decision on interest rates on Thursday.

“Monetary policy needs to withdraw the exceptional support provided during 2020-21,” the fund said.

“Policymakers will have to weigh risks – On the one hand early action could slow the recovery at a point when its sustainability is not assured; on the other hand, inaction could allow second-round effects of inflation to proliferate.”

UK stocks were earlier in the green, after fresh official data showed UK unemployment falling as businesses continued to hire, despite the end of the furlough programme.

The number of people jobless and seeking work dropped by 127,000 to 1.423 million in the three months to the end of October, the Office for National Statistics said.

The jobless rate edged down to 4.2% from 4.3%, as the ONS said the number of people on payrolls exceeded pre-pandemic levels across the country, and had continued to rise.

Much of the recent growth was among part-time workers, who were hit hard at the start of the crisis.

“With no sign of the end of the furlough scheme hitting the number of jobs, the total of employees on payroll continued to grow strongly in November,” Darren Morgan, the ONS’s economic statistics director, said.

He did, however, add that the figures could include people recently made redundant who were working their notice.

In equity markets, some miners continued to rally as copper and aluminium prices rose, with BHP Group up 1.98% and Anglo American 1.03% higher, although Antofagasta reversed earlier gains to close down 0.29%.

Ocado Group jumped 5.47% after the online supermarket group said it had won a patent infringement lawsuit filed by Norwegian robotics company AutoStore Holdings at the International Trade Commission.

The news came alongside Ocado’s fourth-quarter results, which showed revenue fell 3.9% year-on-year, as it felt the impact of labour shortages.

British Airways and Iberia owner IAG ascended 1.73% after the UK government confirmed it was scrapping the red list for international travel from Wednesday, given the ‘Omicron’ variant had now taken hold in the UK.

Cruise operator Carnival and travel hub concessionaire WH Smith were also in the green on the news, advancing 2.24% and 2.77%, respectively.

National Express Group was 1.7% firmer after it agreed to buy Stagecoach in a deal that would see two of Britain’s biggest public transport operators combine in the wake of the pandemic.

Stagecoach shareholders would receive 0.36 new National Express shares for each Stagecoach share in a deal valuing Stagecoach at about £468m.

On the downside, BT Group slumped 4.29% after French telecoms giant Altice said it had increased its stake in the London-listed firm to 18%, and reiterated that it had no plans to stage a takeover under UK rules.

Altice, owned by Patrick Drahi, bought a further 585.5m BT shares after building a 12% stake in June at a cost of £2.2bn – making it BT’s biggest shareholder.

Rentokil Initial slid 12.3% after agreeing to buy Terminex in a stock and cash deal that valued the business at roughly $7.6bn.

In broker note action, BAE Systems and Qinetiq Group were knocked 1.03% and 1.6% lower, respectively, by downgrades at JPMorgan, while Rotork was 1.7% weaker after a downgrade to ‘add’ at Peel Hunt.

Market Movers

FTSE 100 (UKX) 7,218.64 -0.18%
FTSE 250 (MCX) 22,550.69 -0.43%
techMARK (TASX) 4,384.03 -0.94%

FTSE 100 – Risers

Ocado Group (OCDO) 1,684.00p 5.85%
Evraz (EVR) 607.80p 2.56%
Rio Tinto (RIO) 4,854.00p 2.23%
British Land Company (BLND) 513.80p 2.15%
BHP Group (BHP) 2,168.00p 1.98%
NATWEST GROUP PLC ORD 100P (NWG) 218.50p 1.91%
Lloyds Banking Group (LLOY) 45.19p 1.89%
International Consolidated Airlines Group SA (CDI) (IAG) 132.56p 1.73%
Coca-Cola HBC AG (CDI) (CCH) 2,459.00p 1.65%
Vodafone Group (VOD) 114.22p 1.56%

FTSE 100 – Fallers

Rentokil Initial (RTO) 547.60p -12.30%
BT Group (BT.A) 167.35p -4.29%
Darktrace (DARK) 376.00p -4.03%
Spirax-Sarco Engineering (SPX) 15,495.00p -3.77%
Ashtead Group (AHT) 6,004.00p -3.57%
Experian (EXPN) 3,507.00p -3.12%
Intertek Group (ITRK) 5,580.00p -2.96%
Sage Group (SGE) 805.60p -2.66%
Smurfit Kappa Group (CDI) (SKG) 3,884.00p -2.66%
Bunzl (BNZL) 2,889.00p -2.63%

FTSE 250 – Risers

CMC Markets (CMCX) 241.00p 5.01%
Harbour Energy (HBR) 351.40p 4.40%
Ibstock (IBST) 195.50p 4.27%
Energean (ENOG) 882.00p 4.07%
Cineworld Group (CINE) 45.38p 2.83%
Trainline (TRN) 263.20p 2.81%
WH Smith (SMWH) 1,371.50p 2.73%
Wood Group (John) (WG.) 186.40p 2.64%
TUI AG Reg Shs (DI) (TUI) 216.80p 2.60%
Greencore Group (CDI) (GNC) 131.30p 2.50%

FTSE 250 – Fallers

Oxford Biomedica (OXB) 1,060.00p -8.62%
Reach (RCH) 244.50p -8.26%
Discoverie Group (DSCV) 939.00p -4.28%
Dechra Pharmaceuticals (DPH) 4,888.00p -3.30%
Aston Martin Lagonda Global Holdings (AML) 1,190.50p -3.25%
Liontrust Asset Management (LIO) 2,065.00p -3.05%
Kainos Group (KNOS) 1,739.00p -2.74%
Impax Environmental Markets (IEM) 542.00p -2.52%
Serco Group (SRP) 128.00p -2.51%
Watches of Switzerland Group (WOSG) 1,418.00p -2.48%

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