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(Alliance News) - Equity prices in London on Wednesday shook off news of fresh daily record coronavirus infections in the UK to end higher amid cautious optimism over the severity of the Omicron variant.
The FTSE 100 index closed up 44.25 points, or 0.6%, at 7,341.66. The FTSE 250 ended up 260.49 points, or 1.1%, at 23,080.79, and the AIM All-Share closed up 10.24 points, or 0.9%, at 1,183.81.
The Cboe UK 100 ended up 0.5% at 726.92, the Cboe UK 250 closed up 1.3% at 20478.57, and the Cboe Small Companies ended up 1.2% at 15004.11.
In European equities on Wednesday, the CAC 40 in Paris ended up 1.1% and the DAX 40 in Frankfurt ended up 1.0%.
Tentative optimism over the Omicron coronavirus variant supported markets on Wednesday.
"Some preliminary results from the UK Health & Security agency around the effects of the Omicron variant appear to be being received positively today. In line with South Africa's experience, it would appear that the Omicron variant does indeed appear to be milder, although the report also suggests that the higher infection rate could also place increased strain on hospitals, if enough people get it even if mortality is lower," said Michael Hewson, chief market analyst at CMC Markets.
"Nonetheless, it is still good news, and helps justify the move to delay a decision on new restrictions in England until after Christmas, and potentially allow greater leeway next week when restrictions could well change again."
UK Prime Minister Boris Johnson on Tuesday gave the go-ahead for people's Christmas plans, although he warned tougher restrictions could be implemented post-December 25.
However, Wales on Wednesday followed Scotland in unveiling new post-Christmas coronavirus curbs, primarily around hospitality and large events, as the UK's devolved nations move at different speeds to surging Omicron variant cases.
This came as the UK clocked another daily new cases record – 106,122 – as it announced it would buy millions of Covid pills, and also cut the isolation period for infected people from 10 to seven days with negative tests.
Sterling strengthened, however. The pound was quoted at USD1.3346 at the London equities close Wednesday, jumping from USD1.3248 at the close on Tuesday after some mixed gross domestic product data.
On the quarter before, UK gross domestic product advanced by 1.1% in the three months to September, slower than a 5.4% rise in the three months to July and missing consensus of an expansion of 1.3%, which would have matched the first estimate. On a year before, the UK economy grew by 6.8% in the third quarter, slightly beating the market forecast of 6.6% annual growth, which also would have matched the first estimate.
The ONS said the largest contributors to the increase in GDP were hospitality and arts, entertainment & recreation, following the further easing of restrictions and reopening of the economy during the period - something which could now be at risk given the Omicron wave.
Other countries have started to impose restrictions to curb the virus's spread. The Netherlands has already imposed a Christmas lockdown and Germany has slapped a limit of 10 people on private parties, closed nightclubs and banned spectators from major events including soccer matches.
Shaking this off, London-listed travel and leisure firms gained on Wednesday. Jet engine maker Rolls-Royce ended up 3.3% and Holiday Inn owner InterContinental Hotels Group rose 2.7%.
Pandemic-battered stocks also ended in the green in the mid-cap FTSE 250 index, with food and beverage outlets operator SSP Group rising 4.8% and Mitchells & Butlers up 2.7%.
Elsewhere, Taylor Wimpey rose 2.2% after committing to removing terms from contracts that double ground rents for leaseholders every 10 years.
Taylor Wimpey said the UK Competition & Markets Authority investigation into the historical sale of leasehold properties with doubling ground rent clauses by the company is closed, following the agreement of voluntary undertakings. The High Wycombe-based housebuilder said the cost of the undertakings falls within the original provision Taylor Wimpey made in 2017.
Syncona jumped 5.5% after the healthcare investor said its portfolio company Gyroscope Therapeutics will be sold to Swiss pharmaceutical maker Novartis for up to USD1.5 billion.
Syncona has a 54% stake in Gyroscope following a USD42 million investment in March, after co-founding the business in 2016. In a bumper payday, Syncona will receive upfront cash proceeds of GBP334 million from the deal, representing a GBP180 million uplift to the current holding value.
Stocks in New York were higher at the London equities close, with the DJIA up 0.5%, the S&P 500 index up 0.7%, and the Nasdaq Composite up 0.9%.
The dollar was on the back foot amid Wednesday's cautious optimism, failing to get a boost from an upwards revision to the US economy's performance in the third quarter.
On an annual basis, the US economy grew at a rate of 2.3% in the three months to September, slowing from a 6.7% expansion in the second quarter. The latest reading beat the market forecast of an expansion of 2.1%, however, which would have matched the second estimate.
The euro stood at USD1.1327 at the European equities close Wednesday, up against USD1.1267 at the same time on Tuesday.
Gold benefited from dollar weakness. The shining metal was quoted at USD1,797.90 an ounce at the London equities close Wednesday, rising from USD1,785.40 at the close on Tuesday.
However, the safe haven Japanese yen eased back. Against the yen, the dollar rose to JPY114.22 compared to JPY114.14 late Tuesday.
Brent oil was quoted at USD74.74 a barrel at the London equities close Wednesday, up from USD73.48 late Tuesday.
Thursday's economic calendar has German import prices at 0700 GMT and US initial jobless claims at 1330 GMT, alongside durable goods orders and core personal consumption expenditures due at the same time.
By Lucy Heming; lucyheming@alliancenews.com
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