LONDON MARKET CLOSE: Airlines lift off as Omicron fears ease

(Alliance News) - Stocks in London kicked off the new week on the front foot on the hope that the Omicron variant may not be a severe as once thought, and governments around the globe may be able to avoid further restrictions and a return to lockdowns.

"It's been a positive start to the week for the FTSE 100, and European markets more generally as concerns over the Omicron variant continue to diminish on further evidence of mild symptoms and so far, no deaths reported because of getting the virus," Chief Market Analyst at CMC Markets Michael Hewson said.

The FTSE 100 index closed up 109.96 points, or 1.5%, at 7,232.28 on Monday. The mid-cap FTSE 250 index closed up 235.25 points, or 1.0%, at 22,881.33. The AIM All-Share index ended down 2.27 points, or 0.2%, at 1,180.03.

ThinkMarkets analyst Fawad Razaqzada said: "Most of the attention remains on Omicron. While cases of the new Covid variant have been rising across the world, question marks remain as to whether the current vaccines are effective and exactly how transmissible Omicron really is. Until there's more clarity, expect to see more chop and churn in the markets. In South Africa, cases of younger people with more serious symptoms being admitted to hospital have been rising, but most are unvaccinated or have only had one dose.

"This suggests that getting two does - and a booster - might still prove affective against Omicron. If that's proven to be the case by experts, then we may not see significant further restrictions and lockdowns that could send the global economy into another recession. Further lockdowns are the last thing anyone wants right now, and government will do their best to avoid such measures as much as possible."

The Cboe UK 100 index closed up 1.8% at 718.17. The Cboe 250 finished up 1.3% at 20,367.98, and the Cboe Small Companies closed up 0.9% at 14,914.82.

"The biggest beneficiaries are in travel and leisure with British Airways owner IAG shrugging off the tighter rules around testing and quarantine, on reports that the EU could consider easing Omicron travel restrictions to South Africa in the next week or so."

IAG gained 8.1%, easyJet added 5.3%, Ryanair 4.4%, Wizz Air 4.3%, while cruise operator Carnival added 6.6% and travel agent Tui rose 4.2%.

Midcap hospitality stocks Mitchell & Butlers, Restaurant Group and JD Wetherspoon also had a strong session on Monday - adding 6.6%, 8.4% and 6.4%, respectively.

In mainland Europe, the CAC 40 stock index in Paris gained 1.5%, while the DAX 40 in Frankfurt was up 1.4%.

Heading in the opposite direction, Ocado propped up the FTSE 100, losing 2.7%, while online delivery platforms Deliveroo and Just Eat Takeaway gave back 3.1% and 4.9%.

CMC's Hewson said: "The likes of Deliveroo, and Just Eat are also getting a hammering, with the shares of both slipping to record lows over concerns that the EU Commission will propose stricter rules to regulate the gig economy later this week, which could mean much higher costs in the longer term. While this is certainly a valid concern it's also been a well-trailed expectation for several weeks now, which might suggest that the current sell-off might be a little overdone."

BT Group advanced 2.0% after Discovery Communications offered to create a joint venture for BT's UK sports broadcasting, potentially disrupting a GBP600 million sale of BT Sport to DAZN, the Telegraph newspaper reported on Saturday citing "City sources".

The Financial Times on Sunday said "multiple people familiar with the talks" confirmed the Telegraph story.

London Stock Exchange Group gained 1.1% after it agreed to acquire portfolio, margin and capital optimisation services provider Quantile Group. LSEG will pay up to GBP274 million for London-based Quantile. The deal will enable the stock exchange to expand its range of post-trade risk management solutions, it said.

In the FTSE 250, Clarkson added 4.9%. The shipping services provider guided that results for 2021 will be ahead of current market expectations.

Clarkson said underlying pretax profit is now expected to be "not less than" GBP65 million. It posted underlying pretax profit of GBP44.7 million in 2020.

Victrex rose 4.1% after the speciality chemicals company said it delivered a solid and sustainable recovery during financial 2021, prompting it to declare a special dividend.

For the financial year ended September 30, Victrex posted revenue of GBP306.3 million, up 15% from GBP266.0 million last year and pretax profit of GBP92.5 million, up 46% from GBP63.5 million.

Victrex declared a full year dividend to 59.56 pence, up 29% from 46.14p paid last year. In addition, as a result of its available cash balance exceeding the GBP85 million threshold, Victrex also proposed a 50p share special dividend.

The North Sea benchmark was quoted at USD71.92 a barrel Monday evening, up from USD71.43 late Friday. As a result, London's oil majors BP advanced % and Shell 'A' and 'B' gained % and %.

Stocks in New York were following European counterparts higher at the London equities close. The DJIA was up 1.8%, the S&P 500 index up 1.0% and the Nasdaq Composite up 0.2%.

The pound was quoted at USD1.3253 at the London equities close on Monday, up from USD1.3223 on Friday evening.

The euro was priced at USD1.1278 on Monday evening, lower from USD1.1291 late Friday. Against the Japanese yen, the dollar was trading at JPY113.46, up from JPY113.06 on Friday.

Gold stood at USD1,780.00 an ounce, up from USD1,775.82 late Friday.

In the international economic calendar on Tuesday, there is Chinese trade balance figures and a Reserve Bank of Australia rate decision overnight, followed by eurozone unemployment and GDP, UK Halifax house prices, German industrial production and US goods trade.

The local corporate calendar has a trading statement from British American Tobacco, first quarter results from Ferguson and Renalytix and full-year results from Premier Miton and GB Group.

By Paul McGowan; paulmcgowan@alliancenews.com

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