London close: Stocks finish firmer as Omicron concerns ease
London stocks closed in the green on Monday as worries about the Omicron variant eased, with strength in the energy sector lending a hand.
The FTSE 100 ended the session up 1.54% at 7,232.28, and the FTSE 250 was 1.04% firmer at 22,881.33.
Sterling was also stronger, last trading up 0.11% on the dollar at $1.3251, and strengthening 0.42% against the euro to change hands at €1.1747.
“Stocks in Europe are set to close higher this afternoon and indices in the US are enjoying respectable gains as dealers are less worried about the omicron strain of Covid-19,” said Equiti Capital market analyst David Madden.
“The new variant of the virus hit the headlines in late November, and it pushed indices like the FTSE 100, the DAX and the S&P 500 to multi-week lows, but sentiment is starting to turn.”
Madden said it was still early days with regards to the variant, but it appeared the symptoms were mild and thus it seemed unlikely that governments would reintroduce new restrictions.
“Equity markets have a track record of selling off when there are concerns there might be economic disruption as a result of the virus, but the health fears are falling at the moment, hence why we have seen rallies in stocks.”
On the economic front, the Confederation of British Industry cut its UK economic growth forecasts for this year and next, as global supply issues continued to weigh heavily.
The business organisation was forecasting 6.9% GDP growth for this year and 5.1% in 2022, which compared to its previous forecast for 8.2% and 6.1% respectively.
The CBI said the revision "largely reflects weaker than expected outturn data" since its last forecast, with supply chain frictions now not expected to ease until the middle of next year.
“Significant headwinds and rising costs of living threaten the extent of recovery and prospects for economic success,” said Tom Danker, CBI director-general.
“The UK’s New Year’s resolution must be to give firms the confidence to go for growth.
“The super-deduction is a welcome catalyst, but a one-hit wonder isn’t enough to make up for four decades of underperforming business investment.”
Construction output, meanwhile, picked up in November according to a closely-watched survey, as supply bottlenecks started to ease.
The IHS Markit/CIPS UK Construction PMI total activity index was 55.5 in November, up on October’s 54.6.
The reading - which IHS Markit said signalled a "robust and accelerated" expansion - beat consensus, as most analysts were expecting the index to nudge down to 54.2.
“Input price inflation remains extremely strong by any measure, but it has started to trend downwards after hitting multi-decade peaks this summer,” said Tim Moore, director at IHS Markit.
“The latest rise in purchasing costs was the slowest since April, helped by a gradual turnaround in supply chain disruption and a slight slowdown in input buying.
"Port congestion and severe shortages of haulages capacity were again the most commonly cited reasons for longer lead times for construction products and materials.”
Private new car registrations reversed a four month slide in November, according to fresh figures earlier, although supply shortages were still holding back the vehicle manufacturing sector.
A total of 62,600 new cars were made in the UK in November, which was well above the 44,200 figure for November last year, but below the 65,100 cars made in the UK two years ago, before the outbreak of Covid-19.
Total registrations, including business and fleet sales, totalled 115,700 for the month, which was also above November 2020’s 113,800, but well below November 2019’s 156,700.
“Supply shortages and subdued demand continued to hold back new private car registrations in November, despite the jump in the year-over-year rate of growth to 41.7%,” said Pantheon Macroeconomics senior UK economist Gabriella Dickens.
“Indeed, the sharp rise in the growth rate reflects base effects as car sales plummeted in November 2020 as the UK economy re-entered a strict lockdown.”
Finally, on the high street, the ‘Omicron’ variant of Covid-19 was already altering UK shopper habits according to retail surveyor Springboard.
In its weekly outlook of Britain’s retail sector, Springboard said earlier that in the week ended 4 December, its central London "Back to the Office Benchmark" fell 2% despite a 0.5% rise in central London shoppers.
There was also a 3.8% drop in footfall in regional cities, it added, while footfall in UK retail destinations as a whole rose by 0.7% in the week versus the previous week.
"Last week … provided the first evidence of an early impact on footfall of the Omicron variant," said Springboard’s insights director Diane Wehrle.
Springboard said the gap in shopper numbers from the 2019 level was 17.4% last week, but footfall was 43% higher than in 2020.
“The picture is not as positive in large city centres outside of the capital where footfall dropped by nearly double the rate of decline in the Back to the Office Benchmark.”
In equity markets, oil giants BP and Shell gushed 1.66% and 1.93%, higher, respectively, as oil prices rose.
BT Group was up 1.96% after a report that US media group Discovery was in talks over a deal to partner with BT Sport, in a move that would hijack the British television network’s £600m sale to sports streaming service DAZN.
Shipping broker Clarkson rallied 4.75% after lifting its annual profits guidance as the global economy recovered from the impact of Covid-19.
FirstGroup surged 13.26% ahead of results later this week, while ContourGlobal gained 3.06% after it upgraded full-year earnings guidance following a stronger-than-expected performance from its natural gas fired power plant in Spain.
Victrex advanced 4.08% after it posted a rise in full-year profit and revenue and hiked its dividend.
Housebuilder Crest Nicholson was ahead 2.26% after an upgrade to ‘overweight’ at Barclays.
On the downside, Synthomer tumbled 14.4% after a downgrade to ‘underweight’ at Morgan Stanley.
Persimmon was 1.25% weaker after a downgrade to ‘underweight’ from ‘overweight’ at JPMorgan.
The bank said that, following recent house price inflation, it expected affordability to come under further pressure in 2022 as interest rates and the cost of living rose.
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 142.34p 8.08%
Flutter Entertainment (CDI) (FLTR) 10,625.00p 5.93%
Melrose Industries (MRO) 150.60p 4.44%
Rolls-Royce Holdings (RR.) 129.70p 3.84%
Burberry Group (BRBY) 1,832.00p 3.77%
Hikma Pharmaceuticals (HIK) 2,279.00p 3.73%
Intertek Group (ITRK) 5,660.00p 3.66%
Anglo American (AAL) 2,812.50p 3.51%
InterContinental Hotels Group (IHG) 4,701.00p 3.46%
Informa (INF) 479.70p 3.29%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,582.00p -2.74%
Darktrace (DARK) 416.20p -2.48%
Polymetal International (POLY) 1,334.50p -1.51%
Persimmon (PSN) 2,767.00p -1.39%
Scottish Mortgage Inv Trust (SMT) 1,385.00p -0.82%
3i Group (III) 1,400.00p -0.60%
Lloyds Banking Group (LLOY) 46.27p -0.44%
Ferguson (FERG) 11,570.00p -0.39%
Berkeley Group Holdings (The) (BKG) 4,537.00p -0.26%
Aveva Group (AVV) 3,199.00p -0.25%
FTSE 250 - Risers
FirstGroup (FGP) 104.10p 11.76%
Restaurant Group (RTN) 90.80p 8.35%
Hammerson (HMSO) 33.74p 7.38%
Mitchells & Butlers (MAB) 238.40p 6.62%
Carnival (CCL) 1,286.80p 6.56%
Wetherspoon (J.D.) (JDW) 899.50p 6.14%
SSP Group (SSPG) 235.20p 5.71%
Trustpilot Group (TRST) 310.00p 5.44%
easyJet (EZJ) 556.00p 5.26%
Trainline (TRN) 288.40p 4.95%
FTSE 250 - Fallers
Synthomer (SYNT) 406.60p -14.40%
Playtech (PTEC) 718.00p -3.62%
Volution Group (FAN) 495.50p -3.22%
TBC Bank Group (TBCG) 1,550.00p -3.13%
Baillie Gifford US Growth Trust (USA) 316.50p -3.06%
Oxford Biomedica (OXB) 1,222.00p -3.02%
Dr. Martens (DOCS) 388.60p -2.70%
Auction Technology Group (ATG) 1,442.00p -2.57%
Liontrust Asset Management (LIO) 2,270.00p -2.37%
Micro Focus International (MCRO) 344.10p -2.30%