LONDON MARKET CLOSE: FTSE 100 outperforms Europe as Omicron cases rise

(Alliance News) - Stocks in London ended higher on Friday at the end of a volatile week for equities which saw hawkish shifts from major central banks, as investors grow increasingly mindful over the spread of Omicron.

The Federal Reserve on Wednesday adopted a more hawkish approach than anticipated, signalling three rate hikes next year, and three more in 2023. On Thursday, the Bank of England lifted its key Bank Rate, and the European Central Bank said it will end its PEPP stimulus programme in March.

The UK government on Friday reported 93,045 new coronavirus cases, a third consecutive record daily tally, as the Omicron variant fuels a concerning surge in infections across the country.

The FTSE 100 index ended up 9.31 points, or 0.1%, at 7,269.92 - ending the week 0.3% lower.

The mid-cap FTSE 250 index closed up 132.42 points, or 0.6%, at 22,780.38 - shedding 0.6% over the week. The AIM All-Share index gained 1.42 point, or 0.1%, at 1,168.63 - falling 1.9% for the week.

The Cboe UK 100 index ended up 0.1% at 721.20. The Cboe 250 closed up 0.6% at 20,170.33, and the Cboe Small Companies finished up 0.5% at 14,823.78.

In mainland Europe, the CAC 40 stock index in Paris closed down 1.1%, while the DAX 40 in Frankfurt ended down 0.7%.

IG Group's Chris Beauchamp commented: "Equities are ending the week lower on the whole, although the FTSE 100 is winding up flat for the session.

"Macro concerns might be playing a part but a lot of investors have been edging towards the door for some days now, and the lack of any lasting bounce in stocks this week has meant that more are looking for ways to book gains ahead of the two volume-light weeks that will bring 2021 to an end. While the initial reaction to the Fed move was positive, almost exuberantly so, as Wednesday's FOMC and Thursday's BoE hike recede into the past investors appear to be much more cautious, contemplating a year ahead where the tide of central bank largesse definitely starts to go out."

In the FTSE 100, precious metals miners Fresnillo and Polymetal International closed up 2.7% and 2.0% tracking spot gold prices higher.

Gold stood at USD1,803.50 an ounce at the London equities close, higher against USD1,796.70 late Thursday.

At the other end of the large-caps, oil majors ended among the worst performers tracking spot oil prices lower. BP closed down 1.5% and Royal Dutch Shell 'A and 'B' lost 2.1% and 1.9% respectively.

Brent oil was quoted at USD73.70 a barrel at the equities close, down sharply from USD74.90 at the close Thursday, amid Omicron fears.

"After seeing a decent rebound last week, crude oil prices have settled down as concern over future short term demand weighs on prices, and has served to limit the upside, as rising cases of Omicron across the US and Europe temper the upside. The introduction of new restrictions and travel bans looks set to limit demand and help rebuild inventory levels which are already at multi year lows," said CMC Markets analyst Michael Hewson.

Johnson Matthey closed down 1.5%. The speciality chemicals company sold its majority stake in its Health unit to healthcare-focused investment firm Altaris Capital Partners LLC.

The London-based chemical and technology company said it sold the business for an enterprise value of GBP325 million.

Johnson Matthey will retain approximately a 30% equity stake in Health from which it said it expects to realise "significant additional future value". Completion of the sale is expected in mid-2022 and will lead to an accounting loss of GBP200 million for the company.

On AIM, Litigation Capital Management sank 23% after the litigation financing provider removed Nick Rowles-Davies from his position of executive vice chair, effective immediately.

Rowles-Davies was "terminated on the grounds of gross misconduct" by subsidiary LCM Corporate Services Pty Ltd. It said termination followed discovery of expense claims that broke company policy.

The pound was quoted at USD1.3270 at the London equities close, down from USD1.3320 at the close Thursday.

Sterling was unfazed even after UK retail sales rose at a faster pace than expected in November, figures showed, helped by clothing store sales topping pre-virus levels for the first time.

Figures from the Office for National Statistics showed UK retail sales advanced 4.7% yearly in November, beating Trading Economics-cited market consensus of a lesser 4.2% rise. Sales had fallen 1.5% in October.

On a monthly basis, retail sales rose 1.4% in November, following a 1.1% climb in October. Excluding fuel, sales climbed 2.7% annually and 1.1% monthly in November.

The euro stood at USD1.1275 at the European equities close, down from USD1.1310 late Thursday.

On the continent, the growth rate of consumer prices in the euro area during October accelerated in November, data from Eurostat showed.

The eurozone annual inflation rate rose 4.9% in November, ticking up from 4.1% in October. The rate remains more than double the European Central Bank's 2.0% target.

Against the yen, the dollar was trading at JPY113.58, marginally lower from JPY113.60 late Thursday.

Stocks in New York were mostly lower at the London equities close as an unpredictable week for equities amid Covid-19 concerns and a Federal Reserve policy shift draws to a close.

The DJIA was down 0.9%, the S&P 500 index down 0.4% but the Nasdaq Composite was up 0.3%.

Investors have become increasingly worried about the spread of the Omicron variant and what it could mean for the US economic recovery as well as recent economic trends such as high inflation and supply chain snarls.

A light economic events calendar on Monday has an interest rate decision from the People's Bank of China overnight.

The UK corporate calendar on Monday has annual results from cruise liner Carnival and Scottish Investment Trust. In addition, the latest FTSE Russell index review changes come into effect on Monday with Dechra Pharmaceuticals and Electrocomponents joining the FTSE 100 at the expense of Darktrace and Johnson Matthey.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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