LONDON MARKET CLOSE: Global equities brighten as Omicron fears fade

Tue, 07th Dec 2021 16:57

(Alliance News) - The strong start to the week continued on Tuesday as investors rushed back into equities with Omicron variant fears receding almost as fast as they appeared.

"We're seeing improvements in risk appetite again on Tuesday as fears around Omicron continue to ease following earlier reports of less severe symptoms," Oanda analyst Craig Erlam said.

"This is still an extremely fragile market but the early signs are offering some hope. The initial announcement a couple of weeks ago had investors fearing the worst and so far, that's not what we're seeing. Time will tell whether investors are getting ahead of themselves but a couple of days without a negative Omicron headline has the dip buyers flooding back in."

In London, the FTSE 100 index closed up 107.62 points, or 1.5%, at 7,339.90 in London on Tuesday. The mid-cap FTSE 250 ended up 364.09 points, or 1.6%, at 23,245.42. The AIM All-Share closed up 18.50 points, or 1.6%, at 1,198.53. The FTSE 100 and FTSE 250 had closed up 1.5% and 1.0%, respectively, on Monday, though the AIM All-Share had lost 0.2%.

The Cboe UK 100 index closed up 1.4% at 728.19 on Tuesday. The Cboe 250 ended up 1.6% at 20,693.40, and the Cboe Small Companies rose 0.7% at 15,024.97.

In mainland Europe, the CAC 40 stock index in Paris advanced 2.8%, while the DAX 40 in Frankfurt gained 2.9%.

Stocks in New York were following European counterparts higher at the London equities close. The DJIA was up 1.5%, the S&P 500 index up 2.1% and the Nasdaq Composite up 2.9%.

GlaxoSmithKline, working alongside partner Vir Biotechnology, said it continues to build positive test data for Covid-19 treatment sotrovimab in relation to its effectiveness against the Omicron variant.

Last week, Glaxo said its investigational monoclonal antibody treatment sotrovimab demonstrated that it retains activity against all Covid-19 variants of concern, including the Omicron's spike protein.

On Tuesday, Glaxo said further preclinical results were generated through pseudo-virus testing of the combined known mutations of the Omicron variant, which included the maximum number of changes - 37 mutations - identified to date in the spike protein.

GSK added 1.4% in London on Tuesday.

CMC Markets analyst Michael Hewson said: "This week's mood is in stark contrast to the hope and fear that bedevilled sentiment last week, as evidence continues to grow that Omicron, while more transmissible, doesn't appear to be as virulent when it comes to hospitalisations. The milder nature of the symptoms appears to be encouraging investors to look past, the uncertainty of the past week or so, and focus more on the global recovery story."

In London, miners were the day's biggest gainers. Anglo American added 6.5%, BHP 5.6%, Antofagasta 4.3%, and Rio Tinto 4.8%.

"China trade numbers showed a big pickup in commodity demand, with iron ore imports hitting a 16-month high, led by Anglo American and BHP," Hewson said.

Export growth in China lost some steam in November as holiday demand from abroad faded, official data showed Tuesday, but demand for overseas fuel pushed up imports above expectations.

Exports rose 22% on-year, better than analysts expected but below the 27% growth clocked in October, according to the latest customs data.

A recent report by ING said Chinese exports likely slowed "given that most orders for western holiday demand have been fulfilled".

Imports, however, rose an unexpected 32% â€“ well above the 22% increase tipped by a Bloomberg consensus poll.

"The surprisingly high number comes from contributions of coal, natural gas and crude oil imports...it's basically to meet the domestic demand for energy," said Zhaopeng Xing, senior China strategist at ANZ Research.

Given that China still has limited energy capacity and will need time to build it up, energy-related imports will continue in the coming months, Xing told AFP.

Back in London, Ferguson advanced 5.9%, as the plumbing and heating products supplier said supportive end-markets and continued market share gains drove substantial sales growth during the first quarter of its financial year.

For the three months to October 31, net sales were USD6.80 billion, up from USD5.37 billion in the first quarter last year, and pretax profit rose to USD711 million from USD422 million. Ferguson's US business grew net sales by 27%, which comprised 25% organic growth and a further 1.9% from acquisitions. Price inflation was in the low teens during the quarter, it noted.

"We continue to expect a tapering of growth in the second half on tougher prior-year comparatives, and we remain mindful that the recent tailwinds from inflation on gross margins will likely moderate, although the timing and extent remain uncertain. Given the strong momentum in the business and the agility of our business model, our full-year expectations have increased," the company said, without providing details.

Ashtead advanced 3.9%. The equipment rental firm raised its dividend following robust interim results.

For the six months to October 31, revenue increased by 19% to USD3.88 billion from USD3.26 billion last year, and pretax profit jumped by 38% to USD889.8 million from USD645.8 million. In the US alone, revenue rose by 13% to USD3.12 billion from USD2.75 billion a year ago.

Ashtead declared an interim dividend of 12.5 US cents, up 28% from 9.76 cents paid last year.

Following its robust interim performance, Ashtead said it now expects full-year group rental revenue to grow by between 17% and 20%. Previous guidance was for growth of between 13% and 16%.

Informa gained 4.5%. It said it plans to sell the businesses within its Informa Intelligence division and return GBP1 billion to shareholders via a special dividend and share buyback programme once the process is complete.

Ahead of a capital markets day in London, the business publisher and events organiser said it wants to focus on two markets where it believes it has leading positions - Academic Market and B2B Markets.

"As part of this investment and growth strategy we are starting a process to divest our portfolio of high-quality, high-performing brands in Informa Intelligence, thereby unlocking value and providing the funds to further strengthen our position in our two growth markets," said Chief Executive Stephen Carter.

The pound was quoted at USD1.3224 on Tuesday evening, lower from USD1.3253 at the London equities close Monday.

The euro was priced at USD1.1241, lower against USD1.1278. Against the Japanese yen, the dollar was trading at JPY113.58, higher from JPY113.46.

Brent oil was quoted at USD74.74 a barrel on Tuesday evening, up sharply from USD71.92 late Monday. Gold stood at USD1,785.50 an ounce, up from USD1,780.00.

CMC's Hewson said: "Crude oil prices have continued to push higher, after yesterdayâ€™s big gains, with the latest China trade numbers seeing a big increase in domestic demand for energy, not only crude oil, but coal as well."

In a quiet international economic calendar on Wednesday, there is US MBA mortgage applications in the afternoon along with a rate decision from the Bank of Canada.

The local UK corporate calendar has interim results from housebuilder Berkeley, retailer Quiz, and bus operator Stagecoach, while annual results are due from stockbroker Numis, travel agent Tui, and foodservice firm SSP.

By Paul McGowan; paulmcgowan@alliancenews.com