(Alliance News) - A weak end to the year left intact a strong 2021 for stocks in London as the world made significant strides towards economic recovery.
The recent emergence of the Omicron variant of Covid-19 failed to significantly alter the past year's overarching narrative, with investors hopeful that booster vaccinations and milder symptoms will prevent countries imposing the same sweeping lockdowns that choked growth in 2020.
"As we look ahead into 2022, the questions around inflation, growth and the return of the pandemic remain with us, while the monetary policy outlook is clouded by the potential for more rate hikes throughout the coming months. Overall it still seems sensible to expect further gains for stocks, but with perhaps less of the exuberance we saw in 2021," said Chris Beauchamp, chief market analyst at IG.
The FTSE 100 index closed down 18.47 points, or 0.3%, at 7,384.54 on Friday. The UK flagship index rose 14% over all of 2021, though still remains below pre-virus levels.
The FTSE 250 ended down 58.74 points, or 0.3%, at 23,480.81, though has risen 15% over 2021 as a whole.
The AIM All-Share closed up 5.02 points, or 0.4%, at 1,215.50, and up 5.1% since the start of 2021.
The Cboe UK 100 ended ended down 0.3% at 732.30 on Friday and the Cboe UK 250 down 0.1% at 20,917.72, though the Cboe Small Companies ended up 0.2% at 15,301.47.
In European equities on Friday, the CAC 40 in Paris was down 0.4%. Frankfurt was shut on Friday for New Year's Eve.
European stocks ended the year on a soft note as the world ushers in 2022 with soaring coronavirus infection figures.
The year 2021 started with hope, as life-saving vaccines were rolled out to around 60% of the world's population, although many of its poor still have limited access. But as the year drew to a close, the emergence of the Omicron variant pushed the number of daily new Covid-19 cases past one million for the first time, according to an AFP tally.
France on Friday became the latest country to announce that Omicron was now its dominant coronavirus strain.
The number of coronavirus patients in UK hospitals has jumped by more than 40% in a week to the highest number since March 2, according to government data up to December 29. In England alone, the number of patients in hospital has climbed to its highest level since February, relating to when the country was under a strict lockdown.
Stocks in New York were lower at the London equities close, with the Dow Jones down 0.3%, the S&P 500 index down 0.3%, and the Nasdaq Composite down 0.2%.
In London, Fresnillo ended amongst Friday's top performers, up 1.7%, at the end of an underwhelming year for the precious metals miner. Fresnillo shares have fallen 21% since the start of 2021, with peer Polymetal International down 22%.
Looking at stock movements since Pfizer's Covid vaccine news last year, AJ Bell investment direct Russ Mould said: "Presumably investors feel that havens such as precious metals are no longer required and that neither are their producers, although in many cases these firms are very profitable, producing cash and paying dividends."
Gold was quoted at USD1,819.10 an ounce at the London equities close Friday, up against USD1,817.80 at the close on Thursday. But the safe haven metal has slipped 4.2% since the start of the year as investors sought out riskier assets amid coronavirus optimism.
Oil had a blockbuster year. Brent crude was quoted at USD78.32 a barrel at the London equities close on Friday, down from USD79.02 late Thursday but still up 52% since 2021 began.
After collapsing to a low of nearly USD20 a barrel in early 2020, oil charged to multi-year highs in 2021 as fuel demand recovered.
BP shares rose by 30% in 2021 and Royal Dutch Shell 'A' and 'B' shares advanced 25% and 29% respectively.
The worst FTSE 100 performer of the year was lockdown winner Ocado, tumbling 27% as normal life resumed, to some extent, with the advent of Covid vaccines. The stock still remains well above its pre-virus share price, however.
Not all lockdown-battered stocks had a sunny 2021. Cineworld shares tumbled 51% amid uncertainty over continued restrictions and new Covid variants, while easyJet shares slumped 33%.
Amid quiet newsflow on New Year's Eve, shares in Mercia Asset Management closed up 5.8% on AIM. The asset manager said it is expecting a cash windfall when investee sodium-ion battery technology firm Faradion is sold for an enterprise value of GBP100 million.
Merica holds a 16% stake in Faradion, which will be bought by Reliance New Energy Solar, a subsidiary of India's Reliance Industries. Mercia expects to receive initial cash proceeds of GBP18.6 million, plus a further GBP800,000 ring-fenced for three months, as part of the deal.
UniVision Engineering shares bounced back 17% after Thursday's 12% slump. The stock had fallen on news that UniVision had faced a costly dispute with a sub-contractor that resulted in project delays and interim profit more than halving.
The dollar was mixed heading into the year's end. Sterling eased off the USD1.35 level to trade at USD1.3482 at the early London equities close on Friday, down from USD1.3495 at the close on Thursday.
The euro stood at USD1.1327 on Friday afternoon, firm against USD1.1322 late Thursday. Against the yen, the dollar eased to JPY115.10 from JPY115.14.
Of the three pairs, the pound has performed the best against the dollar - down just 1.3% since the start of 2021 - while the euro has shed 7.3% and the yen 10%.
Financial markets in the UK, China and Japan will be closed on Monday for New Year's Day, reopening on Tuesday.
By Lucy Heming; lucyheming@alliancenews.com
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