London midday: Stocks in the red amid growing worries about Omicron, curbs

London stocks were off earlier lows but still firmly in the red by midday on Monday, with travel and leisure shares under the cosh amid worries about the spread of Omicron and the imposition of further restrictions.

The FTSE 100 was down 1.1% at 7,187.15 while the pound was down 0.3% against the dollar at 1.3202 after Health Secretary Sajid Javid said more curbs could be brought in within days.

According to a Telegraph report, Prime Minister Boris Johnson is considering three options as far as restrictions are concerned. These include a plea to limit household mixing over Christmas, a curfew for hospitality and a full lockdown.

Russ Mould, investment director at AJ Bell, said: "After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode.

"Tighter restrictions across parts of Europe and fears that we could see a circuit breaker in the UK have put a chill in the air for investors.

"A lot of people will have been sat indoors over the weekend, watching speculation grow on the news and across social media networks that freedom of movement could be curbed once again.

"Football matches called off, theatre shows postponed, restaurant bookings cancelled; all these factors would suggest that problems are bubbling up, and ones which could have a negative impact on the economy.

“Hospitality companies are asking the government for help again; retailers fear they won’t see a last-minute rush at the tills; and many other sectors are worried they won’t be able to do a normal day’s work because the number of staff catching Covid and being bed-ridden is rising.

"Trends seen on the FTSE 100 on Monday would suggest investors are taking a much broader view of the situation. This isn’t simply a UK issue, it’s potentially a global problem."

Investors were also digesting the latest survey from the Confederation of British Industry, which showed that manufacturing activity remained strong in December but stock adequacy hit another record low.

The CBI’s total orders balance nudged down to +24 from a survey record high of +26 in November, but was ahead of expectations for a reading of +20.

At the same time, the gauge for stock adequacy of finished goods worsened to its weakest on record for a second month in a row, to -24% in December from -16% the month before. Respondents also said they expect price pressures to remain acute in the next three months.

CBI deputy chief economist Anna Leach said: "UK manufacturing demand remains strong, and output accelerated to meet this demand in December. However, behind the scenes, firms are battling pressures on a number of fronts.

"Stock adequacy of finished goods worsened to an all-time low for the second month in a row, and continued expectations for sharp price growth are a further challenge for the sector.

"The spread of the Omicron variant will have been a blow to business confidence. However, firms will welcome the Government’s decision to move from isolation to testing as a method of controlling the virus without unduly impacting their ability to operate."

In equity markets, travel and leisure shares were under pressure. BA and Iberia parent IAG, caterer Compass, Premier Inn owner Whitbread, InterContinental Hotels, Wizz Air, easyJet, Upper Crust owner SSP, Cineworld, WH Smith and Tui were all down. The weakness also came as Germany became the latest European country to tighten restrictions on travellers from Britain.

Events business Informa was the worst performer on the FTSE 100, no doubt amid concerns about the impact of further restrictions.

Rolls-Royce lost ground as it said that Qatar has agreed to invest £85m in its nuclear reactor business in return for a 10% stake The investment is being made by the emirate’s sovereign wealth fund, the Qatar Investment Authority (QIA).

Domino’s Pizza was the standout gainer on the FTSE 250, most likely on expectations it will get a boost from any further restrictions over the Christmas period.

Market Movers

FTSE 100 (UKX) 7,187.15 -1.14%
FTSE 250 (MCX) 22,509.02 -1.19%
techMARK (TASX) 4,406.56 -1.31%

FTSE 100 - Risers

Rentokil Initial (RTO) 549.60p 2.73%
Sainsbury (J) (SBRY) 274.20p 1.11%
Royal Mail (RMG) 501.40p 1.03%
Croda International (CRDA) 9,980.00p 0.58%
Sage Group (SGE) 817.20p 0.47%
Tesco (TSCO) 285.65p 0.44%
Severn Trent (SVT) 2,932.00p 0.10%
SSE (SSE) 1,609.00p 0.00%
British American Tobacco (BATS) 2,762.00p -0.02%
Meggitt (MGGT) 733.20p -0.03%

FTSE 100 - Fallers

Informa (INF) 479.80p -4.42%
Flutter Entertainment (CDI) (FLTR) 10,745.00p -4.02%
Antofagasta (ANTO) 1,322.00p -3.47%
Rolls-Royce Holdings (RR.) 110.70p -3.15%
Coca-Cola HBC AG (CDI) (CCH) 2,443.00p -3.06%
International Consolidated Airlines Group SA (CDI) (IAG) 128.08p -3.00%
Prudential (PRU) 1,237.50p -2.94%
Compass Group (CPG) 1,511.50p -2.89%
Glencore (GLEN) 358.65p -2.63%
Smurfit Kappa Group (CDI) (SKG) 3,869.00p -2.62%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 437.80p 1.81%
BH Macro Ltd. GBP Shares (BHMG) 3,810.00p 1.33%
Micro Focus International (MCRO) 365.90p 1.27%
Watches of Switzerland Group (WOSG) 1,352.00p 0.90%
Provident Financial (PFG) 331.60p 0.85%
Pennon Group (PNN) 1,191.00p 0.85%
Plus500 Ltd (DI) (PLUS) 1,308.00p 0.77%
Moonpig Group (MOON) 373.60p 0.70%
Sirius Real Estate Ltd. (SRE) 137.00p 0.59%
HICL Infrastructure (HICL) 175.60p 0.57%

FTSE 250 - Fallers

WH Smith (SMWH) 1,318.50p -5.82%
Trustpilot Group (TRST) 301.60p -4.62%
NCC Group (NCC) 230.50p -3.96%
Capital & Counties Properties (CAPC) 158.20p -3.77%
Cineworld Group (CINE) 32.42p -3.74%
TUI AG Reg Shs (DI) (TUI) 207.80p -3.57%
Network International Holdings (NETW) 270.00p -3.57%
Countryside Properties (CSP) 418.80p -3.50%
Harbour Energy (HBR) 343.80p -3.43%
Bytes Technology Group (BYIT) 546.00p -3.36%