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(Alliance News) - Stocks in London made a positive start to the new year boosted by travel companies amid hopes the Omicron variant of Covid-19 was not as severe as its predecessors.
UK Prime Minister Boris Johnson will lead a Downing Street press conference as No 10 admitted that the health service is facing a "difficult time" during a "challenging winter".
But Health Secretary Sajid Javid said there was nothing in the data that suggested England needed to move beyond the current Plan B restrictions.
Further, the PM's official spokesman said: "We're not seeing that same jump in beds requiring ventilation, which is pleasing, and almost certainly a function of both the nature of Omicron and our successful booster programme."
He added that the vaccinations and "evidence that Omicron may be milder" means "we are not seeing those huge waves in cases translate into those needing the most serious care that we saw perhaps in previous waves, but that still puts the NHS under significant pressure".
The FTSE 100 index closed up 120.61 points, or 1.6%, at 7,505.15. The FTSE 250 ended up 415.84 points, or 1.8%, at 23,896.65. The AIM All-Share closed down 4.91 points, or 0.4%, at 1,212.00.
The Cboe UK 100 ended up 1.6% at 743.95, the Cboe UK 250 closed up 1.6% at 21,243.03, and the Cboe Small Companies ended up 1.4% at 15,537.20.
In Paris the CAC 40 ended up 1.4%, while the DAX 40 in Frankfurt ended up 0.8%.
"The FTSE 100 has started the year with a solid set of gains, pushing above 7,500 for the first time in almost two years. The index has joined in the strong start to 2022 for most stock markets, most notably of course in the US, where the bull market has begun 2022 in confident fashion by moving to fresh record highs," commented IG Group's Chris Beauchamp.
In the FTSE 100, British Airways-parent International Consolidated Airlines Group ended the best performer, up 11%. Midcap airline operators Wizz Air, Tui and easyJet ended the best performers, up 12%, 10% and 9.2% respectively. AIM-listed Jet2 closed up 5.9%.
"The biggest driver behind the stock market rally and risk appetite in general is relief that Omicron is not as deadly as Delta, which is fuelling expectations that travel restrictions and lockdowns will be lifted soon," explained ThinkMarkets analyst Fawad Razaqzada.
Oil majors BP and Shell tracked Brent prices higher. BP shares closed up 6.2%, while Shell's A shares added 4.9% and its B stock advanced 4.8%.
Brent oil was quoted at USD80.27 a barrel at the equities close, up sharply from USD78.32 at the close Friday.
Meanwhile, OPEC and its allies decided on Tuesday to maintain their policy of modestly boosting oil output next month as the rapidly spreading Omicron variant has so far not heavily hit demand.
The OPEC+ grouping, including top producers Saudi Arabia and Russia, has resisted US pressure for a wider opening of the taps in response to high energy prices fuelling a surge in inflation across the world.
The 13 members of the Organization of the Petroleum Exporting Countries and their 10 allies drastically slashed output in 2020 as the pandemic wreaked havoc with demand.
Last year they decided to step it up again gradually as prices recovered, while reviewing the situation every month.
After a short videoconference meeting on Tuesday, the group said it had agreed to raise output by 400,000 barrels per day in February, the same level as in previous months.
At the other end of the large-caps, online grocer Ocado closed down 7.3% as investors bet that the global spread of the Omicron variant of Covid-19 will not lead to harsh lockdown measures.
Precious metals miners Fresnillo and Polymetal International lost 4.5% and 2.2% respectively, tracking spot gold prices lower.
Gold stood at USD1,814.05 an ounce at the London equities close, falling against USD1,819.10 at the close Friday.
The pound was quoted at USD1.3542 at the London equities close, up sharply from USD1.3482 at the close Friday, after upbeat UK economic data.
The UK's manufacturing sector remained in robust form at the end of 2021, figures on Tuesday showed, though the rate of growth slowed slightly.
The latest IHS Markit/CIPS purchasing managers' index slipped to 57.9 points in December from November's three-month high of 58.1. Still, the print beat the market forecast, cited by FXStreet, of 57.6.
The tally has remained above the 50.0-point neutral mark for 19 months in succession, Markit noted.
Supply chain issues and inflationary pressures were common problems for the global manufacturing sector in 2021. Factory gate selling prices in the UK hit a new series high in December, Markit said. However, supply chain worries eased somewhat.
"Sterling stabilized against the buoyant greenback as it enjoyed support from better than expected UK data. British manufacturing grew at a slightly quicker pace in December which keeps alive prospects of a follow up rate hike by the Bank of England as soon as next month. Attention now turns to a report Thursday on Britain's influential services sector," said Western Union analyst Joe Manimbo.
The euro stood at USD1.1303 at the European equities close, down from USD1.1327. Against the yen, the dollar was trading at JPY116.03, appreciating from JPY115.10.
Stocks in New York were mostly higher at the London equities close building on new all-time highs set the day before as markets continued to shrug off record Covid-19 case counts.
The DJIA was up 0.8% and the S&P 500 index up 0.1%, but the Nasdaq Composite was down 1.4%.
The US reported more than one million new Covid-19 cases Monday, according to data from Johns Hopkins University, as the virus's Omicron variant spread at a blistering pace.
However, traders have been largely inured to the case trends, viewing the newest strain as less virulent than earlier variants.
Apple shares hit a fresh high of USD182.94 at the open before easing back slightly. The iPhone maker became the first US company to hit USD3 trillion in market value, briefly reaching the landmark on Monday in the latest demonstration of the tech industry's pandemic surge.
The economic events calendar on Wednesday has services PMI readings from Germany, the eurozone and the US at 0855 GMT, 0900 GMT and 1445 GMT respectively.
The UK corporate calendar on Wednesday has no events scheduled.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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