LONDON MARKET CLOSE: FTSE 100 rallies, shaking off record Covid cases

(Alliance News) - London stocks burst back from the long Christmas weekend, ending Wednesday higher as they caught up with the recent global equity rally.

However, stocks in mainland Europe pulled back after a strong start to the week as traders digested surging coronavirus cases across the globe.

The FTSE 100 index closed up 48.59 points, or 0.7%, at 7,420.69. The FTSE 250 ended up 246.84 points, or 1.1%, at 23,517.27, and the AIM All-Share closed up 3.48 points, or 0.3%, at 1,201.80.

The Cboe UK 100 ended up 0.4% at 736.18, the Cboe UK 250 closed up 1.2% at 20,940.51, and the Cboe Small Companies ended up 0.9% at 15,281.72.

On returning from a four-day break, UK stocks were unperturbed by news of record Covid infections across Europe and the US.

The US, where Omicron is already overwhelming hospitals, recorded its highest-ever seven-day average of new cases at 265,427, according to a tracker maintained by Johns Hopkins University.

France registered a new daily record of more than 200,000 cases – more than double the number recorded on Christmas Day – and extended into January the closure of nightclubs. In Denmark, which currently has the world's highest rate of infection per person, a fresh record of 23,228 new infections was recorded, which authorities attributed in part to the large numbers of tests carried out after Christmas celebrations.

In European equities on Wednesday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt ended down 0.7%.

In the UK, Boris Johnson's government is scrambling to secure supplies of Covid-19 tests as the prime minister urged people to get swabbed before enjoying New Year celebrations. Ministers acknowledged a worldwide supply issue is hitting the UK as people again struggled to get tests through pharmacies or delivered to their home.

The government website showed no PCR tests were available for home delivery – even for essential workers – in England or Northern Ireland, with "very few" in Scotland, while Wales had availability only in some regions.

England and Wales on Tuesday reported nearly 130,000 new coronavirus infections, a record daily tally.

Despite this, UK stocks pushed higher, with Spirax-Sarco leading the charge in the FTSE 100 with a 3.5% gain.

"Investors face an uncertain economic outlook given the uncertainty caused by Omicron. But we think the new Covid variant is not going to be growth-chocking. Widespread lockdowns, similar to the start of pandemic in 2020, will hopefully be avoided," said Victor Argonov, senior analyst at EXANTE.

British Airways parent International Consolidated Airlines closed down 2.1% on fears the virus surge will knock travel demand. This comes as new analysis from aviation analytics firm Cirium showed coronavirus travel restrictions led to a 71% reduction in the number of international flights to and from UK airports this year compared with pre-pandemic levels.

Anglo-German tour operator TUI was the worst performer in the FTSE 250, ending down 6.0%, while cruise operator Carnival fell 4.7% and budget airline easyJet declined 1.9%.

Precious metals miner Fresnillo fell 2.5%, tracking the price of gold lower. Gold was quoted at USD1,802.90 an ounce at the London equities close Wednesday, down against USD1,808.50 at the close on Friday.

Oil prices remained elevated, but retreated from recent highs. Brent oil was quoted at USD78.22 a barrel at the London equities close Wednesday, up from USD76.00 on Friday but pulling back from recent highs above USD80 a barrel.

Elsewhere in London, shares in Cadence Minerals jumped 38% after it entered a binding settlement agreement with the secured bank creditors of Dev Mineracao, the owner of the Amapa iron ore project in Brazil.

The agreement is the last major precondition for Cadence to vest its initial USD2.5 million for 20% of the large-scale Amapa iron ore mine, beneficiation plant, railway and private port. As a result, Cadence and Indo Sino's joint venture has now secured 100% ownership of Amapa. Cadence has already begun work on the next investment phase to earn an additional 7% of Amapa for USD3.5 million.

Momentum in New York had stalled on Wednesday, with the DJIA up 0.1%, the S&P 500 index flat and the Nasdaq Composite down 0.3%.

Stocks have been on the upswing over the last week as investors bet the latest Covid-19 strain will be less damaging than earlier strains. But the S&P 500 retreated from recent closing highs on Tuesday in a sign the holiday equity rally is growing fatigued.

The dollar was largely on the back foot at the London equities close. The pound was quoted at USD1.3476 late Wednesday, up compared to USD1.3416 at the close on Friday. The euro stood at USD1.1346, up against USD1.1330 on Friday.

Against the safe haven yen, the dollar rose to JPY114.95 from JPY114.38 on Friday.

Thursday's economic calendar has US initial jobless claims at 1330 GMT.

The UK corporate calendar on Thursday has interim results from Creightons, a maker of personal care, beauty and fragrance products.

By Lucy Heming; lucyheming@alliancenews.com

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