LONDON MARKET MIDDAY: Bright start to 2022 as travel stocks take off

(Alliance News) - Equity prices in London surged on Tuesday, kicking off the new year in robust fashion, with travel stocks and oil majors leading blue-chip and mid-cap gainers.

Some pandemic winners struggled, however, online grocer Ocado among them, as investors bet that the global rampage of the Omicron variant of Covid-19 will not lead to harsh lockdown measures.

In New York, attention is on Apple after the iPhone-maker hit a USD3.00 trillion valuation on Monday.

The FTSE 100 index was up 98.70 points, or 1.3%, at 7,483.24 midday Tuesday. The FTSE 250 index was up 446.95 points, or 1.9%, at 23,927.76. The AIM All-Share index was up 2.37 points, or 0.2%, at 1,219.28.

The Cboe UK 100 index was up 1.4% at 742.43. The Cboe 250 was up 1.7% at 21,282.72, and the Cboe Small Companies up 0.9% at 15,458.88.

In Paris, the CAC 40 was up 1.3%, while the DAX 40 in Frankfurt was 0.7% higher.

"The FTSE 100 has set off on a sprint of New Year optimism, shaking off worries of inflation and concerns about the Chinese property market. Stocks reliant on international travel are powering ahead," Hargreaves Lansdown analyst Susannah Streeter commented.

"The 're-opening' race continued on the FTSE 250 with entertainment and travel companies leading the pack and gaining significant ground."

British Airways-parent International Consolidated Airlines Group advanced 12%, topping the FTSE 100 index halfway through London's first trading day of 2022. Events and conferences organiser Informa rose 5.0%.

Budget carriers Wizz Air and easyJet each rose 12%, topping the mid-cap FTSE 250 index.

Oil prices also climbed. A barrel of Brent oil fetched USD79.33 midday Tuesday, up from USD78.32 midday Friday. Oil majors BP and Shell tracked Brent prices higher. BP shares rose 4.4%, while Shell's A shares added 3.7% and its B stock advanced 3.8%.

AJ Bell analyst Russ Mould commented: "The gains for oil firms, airlines and hotel, pub and restaurant operators reflect diminished investor concern about the Omicron variant of Covid-19 amid hopes it is milder, if more transmissible, and therefore may have a limited impact on the economy and won't require onerous or long-lasting restrictions. This is not a certainty, and there is the possibility the market might change its mind on Omicron again if there are signs the sheer volume of cases threatens to overwhelm countries’ health systems.

"If Omicron does prove a short-lived issue, attention may return to inflationary pressures, with minutes from the Federal Reserve's pre-Christmas meeting tomorrow, and US non-farm payrolls data on Friday, helping to give an insight into the situation in the world's largest economy."

Focus will also be on London-listed retailers this week, with rich selection of festive season trading updates on the way. Next kicks things off on Thursday. Sofa seller Made.com and sausage roll maker Greggs also release trading updates on Thursday.

Mould added: "Next, as ever is first out of the blocks and will set the tone on Thursday. However, its status as Britain's best-in-class retailer means it could represent a hard act to follow for its more poorly positioned peers."

Next shares were 0.5% higher midday Tuesday.

Elsewhere, some of the pandemic's bigger beneficiaries struggled at the start of the year. FTSE 100-listed online grocer Ocado fell 4.5%. Online retailers ASOS and boohoo lost 1.2% and 2.1%, respectively.

The takeaway delivery sector also struggled, with Just Eat Takeaway down 2.4% and Deliveroo falling 1.7%. Share price falls of 6.7% for HelloFresh and 3.0% for Delivery Hero meant Frankfurt's DAX 40 was unable to register gains as sizeable as its Paris and London index peers.

The dollar has had volatile day so far, though it is largely on the up.

Sterling was quoted at USD1.3494 midday Tuesday, up from USD1.3482 at the early London equities close on Friday, though down from an intraday high of USD1.3514.

The euro stood at USD1.1284, down from USD1.1327 on Friday, having risen as high as USD1.1309 on Tuesday. Against the yen, the dollar rose to JPY116.12 from JPY115.10.

The UK's manufacturing sector remained in robust form at the end of 2021, figures on Tuesday showed, though the rate of growth slowed slightly as supply chain and inflationary pressures linger.

The latest IHS Markit/CIPS purchasing managers' index slipped to 57.9 points in December from November's three-month high of 58.1. The tally has remained above the 50.0-point neutral mark for 19 months in succession, Markit noted.

"Although a slight easing in supply chain delays helped lift output volumes and take some of the heat out of input price increases, logistic disruptions and staff shortages were nonetheless still stymieing the overall pace of expansion," Markit explained.

Stocks in New York were called higher on Tuesday, as US equities look set to continue their promising start to the year. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are all called up 0.4%, having added 0.6% to 1.2% on Monday.

Apple shares were 0.6% higher in pre-market trade, having risen 2.5% on Monday.

Apple became the first US company to hit USD3 trillion in market value, briefly reaching the landmark on Monday in the latest demonstration of the tech industry's pandemic surge.

Apple also had been the first US company to hit USD2 trillion in August 2020, during the Covid-19 pandemic that stoked demand for personal electronics and digital services, such as Apple's streaming and smartphone app store. And it likewise was the first American firm to overtake USD1 trillion in August 2018.

"Apple has become the founder member of the USD3 trillion club in New York, before slipping out of the door at the end of the trading day on Monday. Scooping such a coveted membership, however briefly, shows just how successful the iPhone in particular has been for the tech giant," Hargreaves Lansdown's Streeter added.

"Given the company's track record and super-strong balance sheet, the bets are on that Apple will keep rolling out new hits, with expectations that virtual reality tech and an electric car will purr into the product line in the years to come. Apple is not immune to the supply chain crisis afflicting the globe and production in the Autumn was hit by global computer chip shortages."

An ounce of gold fell to USD1,803.25 an ounce midday Tuesday in London from USD1,819.10 midday Friday.

By Eric Cunha; ericcunha@alliancenews.com

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