LONDON MARKET CLOSE: Stocks sink on Moderna's Omicron vaccine warning

(Alliance News) - Stocks in London ended lower on Tuesday after the head of Moderna warned Covid-19 vaccines are unlikely to be as effective against the Omicron variant.

Moderna Chief Executive Officer Stephane Bancel's comments, in an interview with the Financial Times, sent investors running for cover.

"There is no world, I think, where (the effectiveness) is the same level ... we had with Delta," Bancel told the newspaper.

The high amount of mutations of Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked, he indicated.

Moderna shares were 7.2% lower in New York.

The FTSE 100 closed down 50.50 points, or 0.7%, at 7,059.45.

The FTSE 250 ended down 236.61 points, or 1.0%, at 22,519.72, and the AIM All-Share closed down 2.95 points, or 0.3%, at 1,187.56.

The Cboe UK 100 ended down 0.5% at 701.90, the Cboe UK 250 closed down 0.9% at 20,052.00, and the Cboe Small Companies ended down 0.9% at 14,685.20.

In Paris the CAC 40 stock index ended down 0.8%, while the DAX 40 in Frankfurt ended down 1.2%.

CMC Marlets analyst Michael Hewson said: "Investors were spooked early on by an interview with the FT given by Moderna CEO Stephane Bancel, that wasn't particularly different from several others given over the last 24 hours.

"With market sentiment as fragile as it currently is and putting to one side that a lot more testing still needs to be done on this variant, this comes across as a remarkably careless thing to say this early on, even allowing for the fact that he's the CEO of a company that is not only producing the vaccine but has made a huge amount of money out of doing so."

In the FTSE 100, travel and leisure stocks ended among the worst performers amid Omicron fears. British Airways parent International Consolidated Airlines lost 2.7%, while Holiday Inn owner InterContinental Hotels Group ended down 3.3%.

In the FTSE 250, Future ended the top gainer, up 12% after the magazine publisher raised its outlook.

For the year ended September 30, the Bath-based firm reported a pretax profit of GBP107.0 million, more than doubled from GBP52.0 million, driven by a favourable revenue mix, with further growth from digital advertising and e-commerce.

Looking ahead, Future said it expects revenue growth to accelerate in the second half of its recently commenced financial year. Future raised its outlook for its 2022 financial year, expecting its adjusted results to be materially above current expectations.

discoverIE Group ended up 2.7% after the customised electronics manufacturer reported a stellar interim performance with record order books and fully recovered revenue and earnings.

The company posted a pretax profit of GBP6.4 million in the six months that ended September 30, rising 14% from GBP5.6 million a year before.

The Guildford, Surrey-based firm's rise in profit came on the back of a 21% revenue increase to GBP174.3 million from GBP143.8 million.

discoverIE upped its interim dividend 6.3% to 3.35 pence from 3.15p.

Greencore Group rose 1.8% after the Irish convenience food maker said that annual profit soared despite supply chain issues and labour challenges.

The Dublin-based sandwich maker reported that pretax profit for the year ended September 24 swung to GBP27.8 million from a loss of GBP10.8 million the year before. This was on revenue which grew 4.8% year-on-year to GBP1.32 billion from GBP1.26 billion.

Conversely, Micro Focus fell 8.3% after setting out a strategy update. It expects a flat or better year-on-year revenue trajectory as it exits the 2023 financial year, following a provisional 5% decline in 2021.

Elsewhere in London, Wise gained 7.7% after upping revenue guidance. Wise is a London-based company that offers international money transfers. It was rebranded from TransferWise.

In the six months to September 30, pretax profit inched 6.0% lower to GBP18.8 million from GBP20.0 million a year before. Revenue was up by a third, however, to GBP256.3 million from GBP192.2 million.

Wise now expects annual revenue growth to be in the mid-to-high 20s on a percentage basis, up from guidance of low-to-mid 20s previously.

The pound was quoted at USD1.3245 at the London equities close, down sharply from USD1.3305 at the close Monday.

The euro stood at USD1.1280 at the European equities close, up from USD1.1270 late Monday after soaring energy prices took eurozone inflation to its highest rate on record in November, official data showed.

Year-on-year, consumer prices are set to surge 4.9% across the bloc, which would mark an acceleration from the 4.1% growth reported for October. Inflation continues to run ahead of the European Central Bank's 2.0% target.

Behind the sharp move higher are energy prices, set to surge 27% on a year ago. Month-on-month, prices in the euro area rose 0.5% in November.

Against the yen, the dollar was trading at JPY113.38, down from JPY113.70 late Monday.

Stocks in New York were sharply lower at the London equities close as markets weighed worries over the latest Covid-19 variant and congressional testimony by top policymakers.

The DJIA was down 1.3%, the S&P 500 index down 1.4% and the Nasdaq Composite down 1.5%.

The threat of "persistently high inflation" has risen and the US central bank will consider removing stimulus more quickly, Federal Reserve Chair Jerome Powell said.

Powell has for months described the burst of inflation fuelled by supply chain snarls and shortages of goods and workers as "transitory," but told the Senate Banking Committee it is time to "retire" the term.

The central bank's preferred price gauge saw a surge of 5.0% for the 12 months ending in October, well above the Fed's 2.0% goal.

"Clearly the risk of more persistent inflation has risen," Powell told lawmakers.

Brent oil was quoted at USD70.75 a barrel at the equities close, plunging from USD73.88 at the close Monday.

"Crude oil has retested the lows it had hit on Friday when prices slumped by USD10. Sentiment is downbeat as fears over the efficacy of the Covid vaccines against the latest variant of the virus have intensified. Comments from the Moderna boss has cast doubt over whether existing vaccines would be able to work on omicron. If they are not effective, then it probably means more economic growth-choking restrictions and lockdowns until scientists find new vaccines," explained ThinkMarkets analyst Fawad Razaqzada.

Gold stood at USD1,776.50 an ounce at the London equities close, lower against USD1,783.85 late Monday.

The economic events calendar on Wednesday has manufacturing PMI readings from Germany, the eurozone, UK and the US at 0855 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively. There is also US ADP employment data at 1315 GMT.

The UK corporate calendar on Wednesday has interim results from fund manager Liontrust Asset Management, stockbroker Peel Hunt and bar and restaurant operator Loungers. In addition, the FTSE Russell index review changes will be announced after the market close on Wednesday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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