London close: Stocks weaker on impact of ‘plan B’ rules

by | Dec 9, 2021

London stocks closed in negative territory on Thursday, with travel and hospitality shares under the cosh following the introduction of so-called ‘plan B’ Covid-19 restrictions in England.
The FTSE 100 ended the session down 0.22% at 7,321.26, and the FTSE 250 was 0.35% weaker at 23,148.04.

Sterling was in a mixed state, meanwhile, last trading 0.11% weaker against the dollar at $1.3190, while it gained 0.42% on the euro to €1.1690.

“The thing about a glass half full is that it’s also half empty,” said AJ Bell financial analyst Danni Hewson.

“After days of optimism-fuelled gains investors seem to have grown slightly weary of thinking positively and markets have slumped.

“There is certainly enough uncertainty around to trouble even those wedded to their rose-tinted specs.”

Hewson noted that China Evergrande’s teeter over the edge seemed to have ended with an expected fall.

“With China’s government having done a pretty good job of assuring global investors that blowback should be limited markets have remained relatively untroubled.

“Then there’s tomorrow’s US inflation data hurtling towards us like a souped-up freight train.

“Even with Omicron in the mix any number over expectation will trouble central bankers.”

On the economic front, UK house prices held steady in November according to industry research released earlier, as the number of people putting their homes on the market continued to ease.

According to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors, the net balance of surveyors reporting that house prices have risen over the past three months remained unchanged in November at +71, a touch above consensus for +70.

The new buyer enquiries balance rose to +13 from +11 in October, with demand recovering from a slight dip in September, when stamp duty returned to its traditional threshold.

“Unless this trend is reversed soon, transaction levels may flatline in 2022 with limited choice proving more significant than any shift in the interest rate environment for new buyers,” said RICS chief economist Simon Rubinsohn.

The government’s renewed Covid-19 restrictions, meanwhile, were described by a retail sector analyst as a “hammer blow” to footfall that would halve visits to London stores compared with pre-pandemic levels.

On Wednesday evening, Prime Minister Boris Johnson announced the adoption of ‘plan B’ measures to limit infections of the Omicron variant, including working from home where possible from Monday, and increased mask requirements in public spaces.

The result would be a sharp drop in visits to UK shops during the retail sector’s busiest period, according to Springboard.

“From our knowledge of previous periods of Covid restrictions we know that enforced home working and increased nervousness around Covid mean a proportion of this footfall will be diverted,” said Diane Wehrle, Springboard’s insights director.

“This clearly represents yet another hammer blow to an industry that is still trying to recover from a huge loss of trade in 2020.”

On the rates front, the Bank of England was still likely to hike interest rates by 15 basis points to 0.25% at its December meeting despite increasing uncertainty around the Omicron variant, according to Deutsche Bank senior economist Sanjay Raja.

Raja said Deutsche was sticking to its call because fundamentally, news of the Omicron variant had changed little on the medium-term economic outlook.

“The labour market remains as tight as it has been in recent memory, in spite of the furlough scheme ending on 30 September,” he said.

“And inflation continues to outpace staff forecasts, despite a sizeable upward revision in the November Monetary Policy Report.”

In equity markets, engine maker Rolls-Royce was down 3.37%, BA and Iberia owner IAG descended 3.32%, caterer Compass lost 1.05%, and Premier Inn owner Whitbread was 0.71% lower.

Restaurant Group lost 4.84%, Cineworld Group was off 3.45%, and low-cost carriers Wizz Air and easyJet flew 2.42% and 2.54% lower, respectively, amid worries about the impact of new Covid rules.

Rolls-Royce was also in focus after it said annual free cash flow would be better than expected after trading improved, but sales at its civil aerospace were lower than forecast.

Investec and Redde Northgate were 0.13% and 1.17% weaker, respectively, as they traded without entitlement to the dividend.

North Sea oil producer Harbour Energy, formerly Premier Oil, gushed 11.84% lower after it announced a $200m annual dividend policy, as it prepared to host its first capital markets day since its merger.

Dr. Martens was on the back foot by 2.73%, reversing earlier gains despite posting a 46% rise in interim profits, driven by a recovery in physical stores sales as they reopened from Covid curbs.

Bus and rail operator FirstGroup fell 5.7% after it warned of uncertainty around the pace of recovery amid fresh developments in the pandemic.

On the upside, Moonpig rallied 4.47% after the online greetings card retailer upped its full-year revenue guidance, despite interim sales coming up against tough lockdown comparatives.

B&M European Value Retail was ahead 1.52% after saying it would pay out £250m to shareholders in a special dividend reflecting strong trading at the discount retailer.

AstraZeneca gained 0.94% after it said its Evusheld antibody combination had been granted emergency use authorisation by the US Food and Drug Administration (FDA) for the prevention of Covid-19 in adults and adolescents who were immunocompromised.

Evusheld, which is tixagevimab co-packaged with cilgavimab, can be used in people with moderate to severe immune compromise due to a medical condition or immunosuppressive medications, who might not have an adequate immune response to a Covid-19 vaccination.

It can also be used in individuals for whom vaccination was not medically recommended.

Elsewhere, ventilation products supplier Volution was ahead 4.86% after a well-received trading update.

Sports Direct owner Frasers Group advanced 4.81% after it reported a 75% rise in interim profit, driven by the strong reopening of stores after lockdown, new Flannels stores and continued growth in online sales.

Watches of Switzerland was 1.93% higher after it posted a jump in first-half profit and revenue as it hailed a “robust” performance in the UK and an “outstanding” one in the US amid strong demand.

Market Movers

FTSE 100 (UKX) 7,321.26 -0.22%
FTSE 250 (MCX) 23,148.04 -0.35%
techMARK (TASX) 4,465.03 -0.08%

FTSE 100 – Risers

BT Group (BT.A) 176.65p 2.79%
B&M European Value Retail S.A. (DI) (BME) 644.00p 2.25%
Intertek Group (ITRK) 5,742.00p 1.70%
Pershing Square Holdings Ltd NPV (PSH) 3,100.00p 1.63%
Halma (HLMA) 3,152.00p 1.61%
Rentokil Initial (RTO) 635.40p 1.44%
Ferguson (FERG) 12,435.00p 1.43%
Experian (EXPN) 3,649.00p 1.16%
Smith (DS) (SMDS) 385.20p 1.16%
Next (NXT) 8,426.00p 1.15%

FTSE 100 – Fallers

Rolls-Royce Holdings (RR.) 124.30p -3.37%
International Consolidated Airlines Group SA (CDI) (IAG) 138.02p -3.32%
Entain (ENT) 1,683.50p -2.12%
Schroders (SDR) 3,449.00p -2.08%
M&G (MNG) 195.65p -1.93%
Intermediate Capital Group (ICP) 2,205.00p -1.87%
London Stock Exchange Group (LSEG) 6,636.00p -1.72%
Abrdn (ABDN) 238.60p -1.69%
Barclays (BARC) 182.84p -1.65%
InterContinental Hotels Group (IHG) 4,677.00p -1.62%

FTSE 250 – Risers

Volution Group (FAN) 539.00p 4.86%
Frasers Group (FRAS) 741.00p 4.81%
Moonpig Group (MOON) 374.00p 4.47%
Baltic Classifieds Group (BCG) 208.00p 3.96%
Future (FUTR) 3,590.00p 3.72%
Balfour Beatty (BBY) 252.80p 2.27%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 501.00p 2.13%
Watches of Switzerland Group (WOSG) 1,486.00p 1.93%
TUI AG Reg Shs (DI) (TUI) 225.90p 1.90%
Redrow (RDW) 698.00p 1.78%

FTSE 250 – Fallers

Harbour Energy (HBR) 379.60p -11.84%
FirstGroup (FGP) 95.90p -5.70%
Convatec Group (CTEC) 184.30p -4.90%
Restaurant Group (RTN) 86.50p -4.84%
Network International Holdings (NETW) 276.10p -4.20%
Endeavour Mining (EDV) 1,615.00p -4.15%
Centamin (DI) (CEY) 87.62p -4.11%
Virgin Money UK (VMUK) 165.80p -3.97%
Cineworld Group (CINE) 49.86p -3.45%
888 Holdings (888) 312.40p -3.40%

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