LONDON MARKET CLOSE: Stocks fall as Omicron variant fears mount

(Alliance News) - Stocks in London ended lower on Thursday with sentiment hit by the first ...

Alliance News 2 December, 2021 | 5:05PM
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(Alliance News) - Stocks in London ended lower on Thursday with sentiment hit by the first Omicron case reported in the US.

News that a patient had come down with the new variant sent shivers through US investors who fear authorities will be forced to reintroduce strict containment measures or even lockdowns, derailing the recovery of the world's top economy.

The FTSE 100 closed down 39.47 points, or 0.6%, at 7,129.21. The FTSE 250 ended down 227.89 points, or 1.0%, at 22,684.84 and the AIM All-Share closed down 7.31 points, or 0.6%, at 1,188.74.

The Cboe UK 100 ended down 0.5% at 706.90, the Cboe UK 250 closed down 0.8% at 20,197.00, and the Cboe Small Companies ended down 0.1% at 14,850.70.

In Paris the CAC 40 stock index ended down 1.3%, while the DAX 40 in Frankfurt ended 1.4% lower.

"European equity markets are down on the day because of the sizeable losses seen in the US last night. Yesterday, America recorded its first case of the omicron variant of the Covid-19 virus, and that impacted markets in Asia and Europe. European indices enjoyed major rallies yesterday, so it feels like traders were looking for an excuse to take some money off the table," said Equiti Capital analyst David Madden.

In the FTSE 100, shares in oil majors ended among the best performers in the wake of the Organization of Petroleum Exporting Countries meeting.

BP closed up 1.4%, while Royal Dutch Shell 'A' and 'B' rose 1.8% and 1.6% respectively.

Major oil producers decided to raise output levels in January, despite the Omicron coronavirus variant raising fresh questions over demand.

The OPEC+ alliance led by Saudi Arabia and Russia has so far resisted US-led pressure to significantly boost output to rein in surging energy prices.

But the emergence of the variant further complicated the equation, as countries have imposed new travel curbs and mull other measures that could dampen demand and hurt oil prices.

The 13 members of the Vienna-based cartel and their 10 allies met for a little over an hour on Thursday afternoon via video conference.

The group decided to stick with its modest increase in output by 400,000 barrels per day every month, as they have been doing since May.

Brent oil was quoted at USD69.67 a barrel at the London equities close, down sharply from USD71.88 at the close Wednesday. Still, the North Sea benchmark managed to recover from intraday lows of USD65.72 in afternoon trade.

"Brent and WTI have both surged from the lows of the day. While OPEC+ decided to stick to its planned output increase, much of this has been factored in, and the lack of any additional increase has been enough to prompt a bounce for now. Whether, given the broader risk-off view, this has further to run remains to be seen, but oil bulls are certainly enjoying some much-needed respite for now," said IG Group's Josh Mahony.

At the other end of the large-caps, Darktrace ended the worst performer, down 8.7%, following the cyber security firm's demotion from the FTSE 100 late Wednesday.

Royal Mail ended down 5.4% after the stock went ex-dividend meaning new buyers no longer qualify for the latest payout.

GlaxoSmithKline lost 0.5%. The drugmaker said its investigational monoclonal antibody treatment sotrovimab has demonstrated that it retains activity against all Covid-19 variants of concern, particularly the Omicron variant. The group expects to post an update from the in vitro testing by the end of 2021.

In the FTSE 250, Auction Technology Group was the best performer, up 12%. The online auction operator reported a widened loss for its recently ended financial year, as costs from its IPO in February and several acquisitions more than offset robust revenue growth.

For the year ended September 30, the London-based company posted a pretax loss of GBP27.3 million, widened from GBP19.0 million the same period the year before.

This was as administrative expenses jumped to GBP66.5 million from GBP25.6 million, relating to its IPO, and its acquisition of North American marketplace Proxibid and LiveAuctioneers during the period. On a reported basis, Auction Technology's revenue was GBP70.1 million, a 98% rise from GBP35.5 million reported for the eight-and-a-half month contribution in the 2020 financial year.

Looking ahead, Auction Technology expects to report revenue growth for its current financial year in the high single digit to low double digits, ahead of market expectations and the company's initial IPO guidance.

At the other end of the midcaps, AJ Bell ended the worst performer, down 8.8%, despite rewarding shareholders with a special dividend after a record year for financial results.

Revenue in the financial year to September 30 increased 15% to GBP145.8 million and pretax profit expanded 13% to GBP55.1 million.

AJ Bell raised its final dividend by 13% to 4.50p and, in light of the strong results, also declared a special payout of 5.00p. This took the year's total dividend to 11.96p, nearly double the 6.16p paid out for the year before.

Aston Martin Lagonda lost 7.7% after the luxury carmaker said Chief Financial Officer Kenneth Gregor will step down "for personal reasons".

The Valkyrie hypercar maker said that Gregor will be leaving his post no later than June 30 next year. Aston Martin has started looking for a replacement and will update investors once it finds a suitable successor.

Elsewhere in London, Superdry closed up 3.2% after RBC upgraded the fashion retailer to Outperform from Sector Perform.

The pound was quoted at USD1.3317 at the London equities close, marginally higher from USD1.3315 at the close Wednesday.

The euro stood at USD1.1315 at the European equities close, down from USD1.1325 late Wednesday. Against the yen, the dollar was trading at JPY113.03, little changed from JPY113.02.

Stocks in New York were mostly higher at the London equities close as investors tried to shrug off two straight losing sessions on worries about Covid-19 and shifting monetary policy.

The DJIA was up 1.0%, the S&P 500 index up 0.6% but the Nasdaq Composite was down 0.3%.

However, the tech-heavy Nasdaq faltered following Tuesday's rout was followed by an early rally Wednesday that fizzled after US health authorities reported the first case of the Omicron variant of Covid-19 in the country.

On the corporate front, Boeing jumped 3.3% in New York after Chinese officials cleared the plane maker's 737 MAX to resume service after a lengthy grounding following two fatal crashes.

Conversely, Apple fell 2.5% after Bloomberg reported that the company may limit production of its latest iPhone due to slowing demand.

Gold stood at USD1,761.10 an ounce at the close, lower against USD1,785.55 late Wednesday.

The economic events calendar on Friday has services PMI readings from China overnight and from Germany, the eurozone, UK and the US at 0855 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively. The US jobs report is due at 1330 GMT.

The UK corporate calendar on Friday has interim results from Hipgnosis Songs Fund and Mind Gym.

By Arvind Bhunjun;

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
AJ Bell PLC 348.40 GBX 0.52 -
Auction Technology Group PLC When Issue 1,156.00 GBX -0.17 -
BP PLC 389.15 GBX -1.26
Aston Martin Lagonda Global Holdings PLC Ordinary Shares 1,299.50 GBX 0.23 -
Superdry PLC 225.00 GBX -9.64 -
Royal Mail PLC 473.70 GBX -3.62 -
Royal Dutch Shell PLC B 1,839.20 GBX -1.72
Darktrace PLC 436.40 GBX 4.65 -
Royal Dutch Shell PLC Class A 1,838.40 GBX -1.66
GlaxoSmithKline PLC 1,636.60 GBX -1.79
Boeing Co 214.19 USD -1.33
Apple Inc 164.51 USD -1.03

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