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(Alliance News) - There was no festive cheer in London on Monday, stocks instead hammered by a combination of coronavirus restriction worries and a setback for US President Joe Biden's hefty social spending bill.
The FTSE 100 index closed down 71.89 points, or 1.0%, at 7,198.03. The FTSE 250 ended down 230.50 points, or 1.0%, at 22,549.88, and the AIM All-Share closed down 9.43 points, or 0.8%, at 1,158.85.
The Cboe UK 100 ended down 1.0% at 714.06, the Cboe UK 250 closed down 1.1% at 19,949.56, and the Cboe Small Companies ended down 0.5% at 14,748.39.
In European equities on Monday, the CAC 40 in Paris ended down 0.8%, while the DAX 40 in Frankfurt ended down 1.9%.
"The clock is ticking down towards Christmas but there's still no sign of a Santa rally," said Chris Beauchamp, chief market analyst at IG.
"The macro backdrop isn't particularly appealing, thanks to the rising numbers of Omicron cases that threatens to bring back tighter restrictions in both the UK and the US, thus hitting earnings in the crucial Christmas and New Year periods," Beauchamp said. "In addition, the Build Back Better programme in the US needs to find some firmer foundations."
On the coronavirus front, UK ministers have reportedly pushed back against calls from scientific advisers for new measures to tackle the Omicron variant before Christmas.
Confirmed cases of the faster-spreading strain have risen by more than 12,000 in the UK – and London's cases alone topped 10,000, according to the latest data on Sunday. But around one third of the Cabinet are said to be reluctant to support new restrictions in the coming days, with Prime Minister Boris Johnson and Chancellor Rishi Sunak among them, according to The Times.
Health Secretary Sajid Javid said it is time to be "more cautious" and did not rule out new measures before Christmas, telling BBC One's Andrew Marr programme there are "no guarantees in this pandemic".
Uncertainty over possible virus restrictions caused the pound to underperform on Monday. The pound was quoted at USD1.3221 at the London equities close, down compared to USD1.3270 at the close on Friday.
Meanwhile, the euro stood at USD1.1299 at the European equities close Monday, firming against USD1.1275 at the same time on Friday, and against the yen, the dollar was trading at JPY113.41, down compared to JPY113.58 late Friday.
In London, basic resources and energy stocks fell on growth slowdown concerns, CMC Markets chief market analyst Michael Hewson said, with miner Antofagasta falling 5.5% and oil major BP ending down 3.1%.
Brent oil was quoted at USD69.78 a barrel at the London equities close Monday, tumbling from USD73.70 late Friday.
Precious metals miners also slipped, with Fresnillo closing down 3.2% and Polymetal falling 1.4%.
Gold was quoted at USD1,793.80 an ounce at the London equities close Monday, down against USD1,803.50 at the close on Friday.
"Gold's resurgence last week was short-lived and to be fair, it appeared to be built on pretty shaky foundations. Central banks raising rates to rein in inflation and the dollar attracting haven flows is hardly the recipe for a sustainable rally in the yellow metal. Still, risk aversion at the end of the year could offer some support if it is maintained," said Craig Erlam at Oanda.
It was a positive session for hygiene firm Rentokil Initial, meanwhile. The stock jumped 4.8%.
"On the upside, having seen some big declines last week on the back of the Terminix deal, Rentokil shares are rebounding strongly as some new buyers' creep back in after last week's big declines. Royal Mail is also higher on the expectation that they should do well from new restrictions prompting more online ordering," said CMC's Hewson.
Shares in Royal Mail rose 1.5% on Monday.
The biggest loser in the FTSE 250 was Cineworld, the leisure stock falling 7.1% over fears of fresh virus restrictions which could limit the operations of its cinemas. Also hit by restriction worries were public transport operator National Express, ending down 4.5%, and magazines and books retailer WH Smith, down 3.9%. Small-cap stock Gym Group shed 8.8%.
Outside of Covid-driven moves, shares in Sage rose 1.2% after it revealed the acquisition of retail management system specialist Brightpearl in a USD299 million deal. Bristol-based Brightpearl provides a retail operating system allowing retailers and wholesalers to automate their back office to reduce costs and improve efficiency.
In New York, the Dow Jones and S&P 500 index both dived 1.8%, while the Nasdaq Composite was down 1.9%.
Wall Street was suffering after US Senator Joe Manchin dealt what seemed to be a fatal blow Sunday to President Joe Biden's massive social spending bill, saying he could not support the legislation's passage through the divided chamber.
The moderate Democrat's vote is crucial to getting the USD1.75 trillion Build Back Better bill through the Senate, and Biden – along with other senior Democrats – has spent weeks trying to secure his support after it was green-lit by the House of Representatives in November.
Manchin's decision is a major blow to Biden, who has spent significant political capital in seeking to secure the passage of what is seen as a signature bill of his presidency.
The economic calendar on Tuesday has German Gfk consumer confidence at 0700 GMT.
The UK corporate calendar on Tuesday has full-year results from Titon Holdings, a manufacturer and supplier of ventilation systems.
By Lucy Heming; lucyheming@alliancenews.com
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