LONDON MARKET CLOSE: Stocks mixed as Omicron relief rally peters out

Fri, 24th Dec 2021 13:15

(Alliance News) - Stock prices in London ended a half-day session mixed on Friday, with little economic or corporate news to drive prices ahead of the Christmas break.

Investors are weighing concerns over coronavirus restrictions and tighter central bank policy against signs that the Omicron strain of the virus is not as potent as earlier variants, such as Delta.

The FTSE 100 index closed down just 1.24 points at 7,372.10, but ended the week up 1.4%.

The mid-cap FTSE 250 index closed up 3.68 points at 23,270.43, gaining 2.2% for the week. The AIM All-Share index closed up 4.60 points, or 0.4%, at 1,199.48, rising 3.0% over the week.

The Cboe UK 100 index closed up 0.1% at 733.03. The Cboe 250 finished 0.1% higher at 20,701.62. The Cboe Small Companies ended down 0.1% at 15,135.15.

In Paris, the CAC 40 stock index finished down 0.2%.

Markets in Germany and the US were shut entirely on Christmas Eve. Paris, Frankfurt and New York will reopen on Monday, but London will remain closed until Wednesday.

"Judging by the stock market rally this week, it appears as though investors are still confident that the ongoing recovery from the pandemic recession can survive the Omicron wave," ThinkMarkets analyst Fawad Razaqzada commented.

Reflecting this, travel and leisure stocks once again finished as gainers in London. Hotel operators Whitbread and InterContinental Hotels both rose 1.2%. British Airways parent-International Consolidated Airlines gained 1.9%. Among mid-caps, travel stocks Tui, easyJet and Carnival ended up 4.3%, 2.0% and 2.4%, respectively.

"With the markets already staging a relief rally back to record or multi-year highs, and thus undoing the Omicron-driven sell-off from November and early parts of December, the renewed optimism is likely to be priced in by now," Razaqzada said.

"Any further good news regarding Omicron is therefore likely to have progressively less impact on the markets. Investors are therefore likely to focus on other factors when making trading and investment decisions. These include monetary tightening by the Fed and other major central banks."

CRH closed up 0.7%. The Irish building materials firm said it has entered into arrangements with Societe Generale to repurchase shares wort up to USD300 million. The share buyback will commence on Friday and will end no later than March 30, 2022.

Analysts at Davy said: "Share purchases since May 2018 now total USD2.9 billion. That means that on an annualized basis CRH is returning USD2 billion to shareholders by way of dividends and buybacks, while investing another USD2 billion in growth opportunities.

"That financial muscle is likely to strengthen in 2022 given the group's impressive cash generating capabilities. That, combined with the group's integrated solutions model and favourable end-markets, underpins a compelling investment case in our view."

Reckitt Benckiser closed up 0.1%. The consumer goods firm said it has agreed to sell its E45 skincare brand and related sub-brands to Swedish healthcare firm Karo Pharma for an enterprise value of GBP200 million.

The Slough, England-based firm said the sale is another step forward in its plan to actively manage its portfolio for higher growth, following the recent sales of its IFCN business in China and its Scholl brand, as well as the acquisition of Biofreeze.

In the FTSE 250, Capita closed up 1.6%. The outsourcer said it has sold its software business, AMT Sybex, to Jonas Computing for up to GBP40 million.

The London-based company said Jonas Computing will pay GBP23 million on completion in January. An additional amount of up to GBP17 million may be payable to Capita over 24 months subject to conditions. The sale is part of Capita's intention to strengthen its balance sheet and focus on its two core divisions, Capita Public Service and Capita Experience, it said.

On AIM, Deepmatter closed down 30% at 0.44 pence. The digital chemistry data company announced a deeply discounted share offer and a downgrade to its annual revenue guidance.

DeepMatter said it would carry out a share placing and subscription at a price of 0.1p per share to raise GBP2.6 million. The placing price is a 84% discount to Thursday's closing price of 0.63p.

Separately, DeepMatter added it now expects its multi-year contract with AI biology-based startup Standigm to be signed in 2022, rather than 2021, which will result in revenue for 2021 being lower than previous expectations.

The pound was quoted at USD1.3416 at the London equities close Friday, rising from USD1.3402 late Thursday.

The euro was priced at USD1.1330, up from USD1.1310. Against the yen, the dollar was trading at JPY114.38, flat from JPY114.36.

"The dollar weakened further across the board as the risk-on mood in markets extended following more optimistic Covid headlines while equities surged, with the S&P 500 [on Thursday] hitting another all-time high. Sentiment was supported by economic data which boosted optimism that economic growth will weather the Omicron outbreak, and a UK study suggesting that Omicron infections are less likely to lead to hospitalisations than Delta," said analysts at Monex.

Sterling was finding support from expectations the Bank of England will look past risks posed by the Omicron variant and further tighten monetary policy in 2022, following the central bank's surprise rate hike earlier this month.

"We expect the [Monetary Policy Committee] to judge that it can give the economy some breathing space to get over Omicron, given that high inflation is almost solely the product of higher energy and global goods prices, and medium-term inflation expectations have remained well-anchored. Accordingly, we expect the MPC to wait to May to hike Bank Rate to 0.50%, and to November to increase it to 0.75%," said Pantheon Macroeconomics.

Brent oil was quoted at USD76.00 a barrel at the close Friday, lower against USD76.22 late Thursday. Gold stood at USD1,808.50 an ounce, marginally higher from USD1,807.10.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com