(Alliance News) - Stocks in London ended lower on Wednesday ahead of the US Federal Reserve's interest rate decision, while fears over the Omicron variant remain.
The UK has recorded the highest daily total of lab-confirmed coronavirus cases since the pandemic began, as the Omicron variant spreads.
Official figures showed there had been 78,610 new cases recorded as of 0900 GMT on Wednesday. It is the highest figure announced since mass testing began in summer last year and surpasses the previous record of January 8 when 68,053 new cases were reported.
The FTSE 100 index ended down 47.89 points, or 0.7%, at 7,170.75. The mid-cap FTSE 250 index closed down 116.81 points, or 0.5%, at 22,433.88. The AIM All-Share index ended down 0.56 of a point at 1,164.11.
The Cboe UK 100 index ended down 0.7% at 711.67. The Cboe 250 closed down 0.7% at 19,847.64, and the Cboe Small Companies ended down 1.2% at 14,623.47.
In mainland Europe, the CAC 40 stock index in Paris ended up 0.5%, while the DAX 40 in Frankfurt ended up 0.2%.
"European markets have struggled to make gains today, ahead of this afternoon's Fed decision with the FTSE100 once again finding itself weighed down by concerns over Omicron, with weakness in energy prices and travel and leisure weighing on the UK benchmark," said CMC Markets analyst Michael Hewson.
In the FTSE 100, DCC ended the best performer, up 9.0%, after the Irish firm bought a US-based sales and distribution business in what the group said was its largest acquisition to date.
The Dublin-based sales, marketing and support services firm unveiled the acquisition of Philadelphia, Pennsylvania-based Almo at an enterprise value of USD610 million. The move will form a "major step" in DCC's continuing expansion into North America, the company said.
Bunzl gained 1.3% after the distribution firm said it expects to post a "strong performance in 2021".
Underlying revenue growth will be in the "high single digit" level compared to 2019, before the onset of the pandemic. Revenue in 2021 is tipped to rise 2% year-on-year at actual exchange rates, and 7% on a constant currency basis.
At the other end of the large-caps, Rentokil Initial ended down 4.7%. The stock extended a 5.6% drop from Tuesday, when the pest control firm's acquisition of a US peer was eventually poorly received, after an initial share price rally.
International Consolidated Airlines Group closed down 5.1% with the British Airways parent on the verge of scrapping a planned EUR500 million takeover of Spanish airline Air Europa, weeks after a UK watchdog opened a probe on the deal.
The airline group, which also owns Iberia and Aer Lingus, said it is at an "advanced stage" of talks to terminate the agreement. IAG said a "further update will be made in the future".
Air Europa is a Spanish airline that operates domestic and international flights in Europe, as well as long-haul routes to Latin America, the US, the Caribbean and North Africa. It is owned by Globalia. IAG first announced plans for its Iberia arm to buy the carrier in 2019 for EUR1 billion, although the price was slashed after the Covid-19 pandemic knocked the entire sector by grounding planes.
In the FTSE 250, Baltic Classifieds Group ended the best performer, up 4.8%. The online classifieds portals company swung to a pretax loss despite its highest six monthly revenue across all four of its business units.
For the six months ended October 31, the Lithuania-based company reported it had swung to a pretax loss of EUR7.6 million from a EUR386,000 profit.
Revenue was up 22% to EUR25.0 million from EUR20.4 million the previous year. Baltic Classifieds said this was its highest ever six-month revenue in all four business units and had exceeded the expectations made at the time of its initial public offering.
Baltic Classifieds said its profit was impacted by one-off expenses related to its IPO, debt re-arranging costs, and a rise in people costs which increased to EUR3.5 million from EUR2.9 million in the same period the previous year.
Languishing at the foot of the FTSE 250, Cineworld sank 39% after the movie house operator said a Canadian court has ruled against it in the case brought by jilted takeover target Cineplex.
The court has ordered Cineworld to pay to Cineplex CAD1.23 billion, about GBP720 million, in lost synergies and CAD5.5 million in transaction costs.
Cineworld said it will appeal the judgement and no damages will be payable during appeal. The Brentford, London-based firm had agreed to the acquisition before the Covid-19 pandemic and cancelled it as lockdowns closed cinemas.
Currys lost 9.3% as the electrical goods retailer warned of weaker recent trading amid supply chain challenges.
In the half year that ended October 30, revenue fell 1.5% annually to GBP4.79 billion from GBP4.86 billion. Pretax profit, however, rose by 6.7% to GBP48 million from GBP45 million, helped by net finance costs being reduced by 15% to GBP47 million from GBP55 million a year ago.
Adam Vettese, analyst at eToro, said: "Online sales currently account for 43% of Currys' total in the UK, with most people liking to research technology online and then see their purchase physically in store before parting with their cash. That's down from 55% this time last year when we were in the middle of lockdowns. If we do see emptier high streets or, God forbid, another lockdown, then Currys will need to lean on its digital channel even more if it is to reach its full-year guidance."
The pound was quoted at USD1.3222 at the London equities close, down from USD1.3231 at the close Tuesday, ahead of the Bank of England's interest rate decision on Thursday which takes place against a backdrop of rising inflation.
The UK's annual inflation rate accelerated to 5.1% in November, from 4.2% in October, according to the Office for National Statistics. The Bank of England's inflation target is 2%.
November's figure was above market estimates of 4.7%, cited by FXStreet.
"This is the highest CPI 12-month inflation rate since September 2011, when it stood at 5.2%," the ONS said.
On a monthly basis, consumer prices increased 0.7%, topping expectations of a 0.4% hike, following October's 1.1% rise.
Despite inflationary pressures showing little sign of easing in the month since, most commentators expect the BoE to stay put once again on Thursday.
"[The inflation report] will reignite speculation that the Bank of England will raise its policy interest rate tomorrow. However, BoE policymakers will also need to take into account the greater uncertainty generated by the new Covid variant, which is still expected to tip the balance in the direction of delaying a move for now," analysts at Lloyds Bank commented.
The euro stood at USD1.1262 at the European equities close, down from USD1.1275 late Tuesday, ahead of the European Central Bank's interest rate decision on Thursday.
The ECB is expected to hint at the first steps towards normalising monetary policy on Thursday, though the emergence of the Omicron variant means President Christine Lagarde may look to keep the central bank's options open, even in the event of a taper.
Against the yen, the dollar was trading at JPY113.80, up from JPY113.70 late Tuesday.
Stocks in New York were lower at the London equities close ahead of the US Federal Reserve's policy announcement, which is expected to include steps to act more quickly to quell inflation.
The DJIA was down 0.2%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.6%.
The central bank has promised to keep rates lower for longer than normally to help the US economy recover from the pandemic, but with prices surging at record levels through much of this year, the Federal Open Market Committee is set to announce it will end its pandemic bond-buying program early next year.
That would set the stage for interest rates hikes to begin.
The meeting concludes at 1900 GMT and the committee also will release forecasts of its members' expectations for inflation and interest rates in the years to come.
Investors will be paying close attention to what Fed Chair Jerome Powell has to say, and already are digesting data released before markets opened showing a slight and underwhelming rise to US retail sales last month.
US retail sales grew at a slower pace than expected in November, according to official data. Numbers from the Census Bureau showed retail sales grew 0.3% monthly in November, slowing from October's upwardly revised 1.8% rise.
November's growth came in below expectations of a 0.8% rise in sales, according to FXStreet-cited consensus.
Brent oil was quoted at USD73.30 a barrel at the equities close, firm from USD73.23 at the close Tuesday.
Gold stood at USD1,767.04 an ounce at the London equities close, lower against USD1,775.45 late Tuesday.
The economic events calendar on Thursday has PMI readings from the eurozone, UK and the US at 0900 GMT, 0930 GMT and 1445 GMT respectively. The latest US jobless claims numbers are due at 1330 GMT.
The UK corporate calendar on Thursday has trading statements from outsourcer Serco and from oilfield services firms Hunting and Petrofac.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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