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(Alliance News) - Global equities ticked lower on Thursday with investors eyeing a raft of central bank updates next week and are becoming uneasy about the spread of the Omicron variant, which is fast usurping Delta as the dominant Covid-19 strain.
Although the EU medicines watchdog said Omicron may cause milder disease, investors were mindful of a Japanese study which suggested the variant could be over four times more contagious.
Bloomberg on Thursday reported findings from a study performed by Hiroshi Nishiura, a Japanese scientist, which suggested the new variant could be 4.2 times more transmissible in its early stage than Delta.
The FTSE 100 index ended down 15.79 points, or 0.2%, at 7,321.26. The mid-cap FTSE 250 index closed down 92.36 points, or 0.4%, at 23,138.07. The AIM All-Share index lost 3.27 points, 0.3%, at 1,196.42.
The Cboe UK 100 index ended down 0.2% at 726.11. The Cboe 250 closed down 0.5% at 20,541.90, and the Cboe Small Companies ended down 0.2% at 15,035.39.
In mainland Europe, the CAC 40 stock index in Paris lost 0.1%, while the DAX 40 in Frankfurt ended down 0.3%.
In New York, the Dow Jones Industrial Average was marginally lower at the time of the closing bell in London. The S&P 500 was down 0.2% and the Nasdaq Composite was 0.5% lower.
With Omicron-related concerns and a series of central bank interest rate decisions next week, global equities were in cautious mood on Thursday.
Next week, the US Federal Reserve, Bank of England, European Central Bank and Bank of Japan all make interest rate decisions.
"Stocks throughout the US and Europe have struggled to maintain their upward trajectory today, as traders struggle with the dual effects of near-term economic restrictions and a likely ramp-up in monetary tightening in the coming months," IG analyst Joshua Mahony commented.
Equity markets in the UK had to contend with the latest imposition of Covid-19 curbs, announced on Wednesday.
With concerns mounting, the UK government has brought back guidance to work from home and to wear face masks in most indoor venues, including theatres and cinemas.
Mandatory vaccine passports are being brought back for larger events and nightclubs, where people must prove they are double-jabbed. A negative lateral flow test also will be accepted, UK Prime Minister Boris Johnson said.
Transport firm FirstGroup fell 5.7% amid the return to work from home guidance. The stock fell despite the company reporting an earnings hike in the first half ended September 25.
Including discontinued operations, revenue increased 0.3% year-on-year to GBP3.11 billion, while it swung to a pretax profit of GBP516.5 million from a GBP100.1 million loss.
The pound was also hit by the UK's latest Covid-19 containment measures. Sterling fell to USD1.3191 late Thursday, from USD1.3236 at the London equities close Wednesday.
"The Number 10 party row is also weighing on sentiment, with Labour calling for Boris Johnson to resign if the prime minister is found to have misled MPs about the three parties that took place last year, which are being investigated for Covid rule breaches," ThinkMarkets analyst Fawad Razaqzada commented.
The probe into alleged Covid rule-busting parties in the UK government has been widened to include another festive celebration and a reported staff leaving do.
Cabinet Office minister Michael Ellis has told MPs that Cabinet Secretary Simon Case will, as well as investigating reports of a staff Christmas bash at Downing Street on December 18, 2020, also look into two other alleged events.
He will include in his review a confirmed gathering at the Department for Education's Whitehall headquarters on December 10 last year, and a reported leaving event for a Number 10 aide – allegedly attended by Boris Johnson – on November 27.
The two December dates coincide with when mixing between households in London was restricted, with England in a month-long lockdown during November.
The euro was priced at USD1.1280, lower from USD1.1332 late Wednesday. Against the Japanese yen, the dollar was trading at JPY113.52, down from JPY113.83.
Covid-19 fears also hit oil prices. Brent oil was quoted at USD75.22 a barrel late on Thursday, down from USD75.86 Wednesday evening. Gold stood at USD1,777.03 an ounce, lower against USD1,782.70.
Back in London, BT closed the best large cap performer, rising 2.8% as a strong recent share price run continues. So far in December, the telecommunications firm has advanced 11%.
Rolls-Royce closed 3.4% lower, with the jet engine maker hit by its exposure to the travel sector, where Covid-19 worries continue.
More promisingly, the company said it expects its 2021 cash outflow to be better than forecast.
The London-based firm said the gradual recovery in international flying alongside a market recovery in the Power Systems unit and resilience in the Defence arm were driving improvements in trading. In addition, its restructuring programme, launched in May 2020, is delivering sustainable cost savings more quickly than initially anticipated.
This leaves the company well-placed to meet the GBP1.3 billion savings target set for the end of 2022, it said. Rolls-Royce said the improved trading performance drove a return to positive free cash flow in the third quarter and reduced the outflow expected in the second half.
In addition, around GBP300 million of original equipment concession outflows, originally expected in 2021, are now expected to fall in 2022 due to delayed delivery of aircraft for which it has already supplied engines.
Among mid-caps, Dr Martens dropped 3.5%, among the worst performers, despite promising interim earnings.
The boot maker's revenue grew 16% in the six months to September 30 to GBP369.9 million, from GBP318.2 million a year earlier. Pretax profit grew 46% to GBP61.3 million from GBP41.9 million.
Sports Direct owner Frasers Group topped the FTSE 250, rising 4.8%. It reported a rise in profit in the first half but cautioned its trading may take a hit from the new lockdowns across Europe and supply chain problems.
In the 26 weeks to October 24, the retailer - which also owns Flannels and House of Fraser - recorded pretax profit of GBP186.0 million, up 75% from GBP106.1 million a year before.
Interim revenue surged 24% to GBP2.34 billion from GBP1.89 billion.
"Both our bricks and mortar and online businesses have continued to perform well since reopening from the last lockdown in the UK in March 2021," Chair David Daly ​said.
Daly, however, said Frasers is wary of the "shadow of uncertainty" cast by the ongoing pandemic, including lockdowns returning to parts of Europe and with the emergence of new variants.
Elsewhere in London, Go-Ahead dropped 15% after the transport operator apologised to the UK government after admitting to errors and failings in the way it ran the Southeastern rail franchise.
Newcastle upon Tyne-based Go-Ahead said the review of London & South Eastern Railway franchise with the UK government found that "serious errors" were made by London & South Eastern Railway in its dealings with the Department for Transport over several years. LSER is 65% owned by Go-Ahead.
Go-Ahead said it has accepted that by "failing to notify the DfT of certain overpayments or monies due to the DfT, LSER breached contractual obligations of good faith contained in the franchise agreements." As a result, the company has apologised to the DfT.
What's more, shares in the company will be suspended from trading, starting January 4.
On AIM, Victorian Plumbing plunged 38% as it announced annual profit fell and warned sales in its new financial year have been subdued as consumers have made less "big ticket material homeware purchases".
The bathroom products retailer said pretax profit in the year ended September 30, reduced 17% to GBP19.7 million from GBP23.7 million in the year before. Revenue, however, improved 29% to GBP268.8 million from GBP208.7 million.
Looking ahead, however, it said it is hard to predict its short-term outlook. In addition, the company said sales in the first two months of the new financial year are largely flat annually.
"Whilst consumers have continued to spend more on leisure and less on big ticket material homeware purchases, demand and revenue have been broadly the same as last year and 41% ahead of FY20," Victorian Plumbing said.
Friday's economic calendar has UK gross domestic product data for October released at 0700 GMT. German inflation data is posted at the same time, before US CPI numbers at 1330 GMT.
The local corporate calendar has a trading statement from miner Anglo American.
By Eric Cunha; ericcunha@alliancenews.com
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