LONDON MARKET MIDDAY: Stocks buoyed by Covid studies and treatments

(Alliance News) - Stock prices in London were higher at midday on Thursday on optimism over the weaker severity of the Omicron variant of Covid-19, supported by scientific studies, booster shots and oral antiviral treatments.

In separate studies, scientists in South Africa, London and Scotland found that catching Omicron is less likely to result in severe symptoms and hospital admission than earlier Covid strains such as Delta.

These studies have strengthened hopes that Omicron is unlikely to curtail the global economic recovery.

In addition, AstraZeneca announced data from a new laboratory study showing that a third dose of Vaxzevria, its Covid-19 vaccine, significantly boosted levels of antibodies against the Omicron variant.

In the study, the Anglo-Swedish drugmaker said that neutralisation titres for Omicron were raised following a third dose with Vaxzevria, compared to titres after a second dose. In addition, the levels after the third dose booster were higher than the neutralising antibodies found in those previously infected with and recovered naturally from the prior variants.

Shares in AstraZeneca were 0.1% lower in London at midday.

The FTSE 100 index was up 12.29 points, or 0.2%, at 7,353.85. The mid-cap FTSE 250 index was up 171.45 points, or 0.7%, at 23,252.24. The AIM All-Share index was up 5.80 points, or 0.5% at 1,189.61.

The Cboe UK 100 index was up 0.4% at 729.80. The Cboe 250 was 0.9% higher at 20,663.64. The Cboe Small Companies was up 0.5% at 15,080.22.

In mainland Europe, the CAC 40 stock index in Paris was up 0.5%, while the DAX 40 in Frankfurt was 0.3% higher.

Analysts at OFX said: "Investors struck a more positive sentiment in the financial markets, as three separate reports suggested that the Omicron variant may result in less severe illness than previous variants of the virus.

"The old theory of the 'Santa rally' seems to also hold true this year as the markets rise ahead of Christmas. Whether this lasts post the Christmas euphoria appears to be seen, as there is a bumpy road ahead with much uncertainty around Covid and its variants, China's Evergrande story and inflationary pressures in 2022."

In the FTSE 100, travel and leisure stocks were among the best performers.

British Airways-parent International Consolidated Airlines was the best performer, up 3.5%. Budget carriers easyJet and Wizz Air were among the biggest midcap gainers, up 4.2% and 3.2%, respectively. AIM-listed Jet2 was up 4.6%.

Blue-chip hotel operators Whitbread and InterContinental Hotels Group were up 2.4% and 1.7% respectively.

Flutter Entertainment was up 2.7%. The gambling firm bought Milan-based online gaming operator Sisal from CVC Capital Partners Fund for EUR1.91 billion, in a bid to attain "a gold medal position" in the Italian market.

Dublin-based Flutter, formerly known as Paddy Power Betfair, said the transaction is likely to complete during the second quarter of 2022 and is expected to be accretive to adjusted earnings in the first 12 months after completion.

Flutter said the deal increases its exposure to an "attractive, fast-growing, regulated online market". The company highlighted that Italy is Europe's second largest regulated gambling market and one that has seen online penetration grow from 10% in 2019 to 20% in 2021.

At the other end of the large-caps, Evraz and British American Tobacco were the worst performers, down 3.3% and 2.7%, respectively. The stocks went ex-dividend, meaning new buyers no longer qualify for the latest payout.

In the FTSE 250, Balfour Beatty was up 2.5% after the construction firm said its US subsidiary Balfour Beatty Communities has reached a resolution with the Department of Justice.

Balfour Beatty said the deal resolves the DoJ's criminal and civil investigations into some performance incentive fees improperly claimed by Communities between 2013 and 2019, related to maintenance work at US military housing installations.

Under the terms of the resolution, Communities has pleaded guilty to one count of fraud and has agreed to the appointment of an independent compliance monitor for a three-year period. Communities cooperated fully with the DoJ in its investigation, Balfour said.

Communities will pay a total resolution amount of USD65.4 million, comprised of USD33.6 million in penalties and USD31.8 million in restitution, Balfour added.

At the other end of the midcaps, Reach was the worst performer, down 3.5%. The Telegraph reported late Wednesday the newspaper publisher faces intervention by the UK Pensions Regulator for not increasing contributions to address a large funding deficit.

The trustee of its pension fund, in a letter to scheme members last week, said it had "requested that the Pension Regulator now take a more active role to try to help reach a positive outcome for all stakeholders", according to the Telegraph.

"Any solution to this will need to involve additional contributions, which in the trustee's view are readily affordable by the company in the period to 2027," a spokesperson for the trustee said.

In response, Reach told the Telegraph: "The company and the board remain committed to working towards the objective of achieving funding of all schemes as previously agreed in our 2016 review."

On AIM, Libertine Holdings made its stock market debut trading at 30 pence, up 50% from its initial public offering price of 20p. The Sheffield, England-based company offers technology for power generation from renewable fuels, making linear electrical machines for original equipment manufacturers of powertrains.

The pound was quoted at USD1.3420 at midday Thursday, up from USD1.3346 at the London equities close Wednesday.

The euro was priced at USD1.1328, unmoved from USD1.1327. Against the yen, the dollar was trading at JPY114.30, marginally higher from JPY114.22.

Brent oil was quoted at USD75.40 a barrel Thursday at midday, up sharply from USD74.74 a barrel at the London equities close Wednesday. Gold stood at USD1,805.56 an ounce, higher against USD1,797.90.

US stock index futures were pointed to a higher open amid cautious optimism after the US Food & Drug Administration on Wednesday authorised Pfizer's oral Covid-19 treatment. Shares in the New York-based drugmaker were up 0.5% in pre-market trade.

The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.3%, and the Nasdaq Composite up 0.2%.

Paxlovid, which comprises two types of tablet, was granted an emergency use authorization by the FDA after a clinical trial showed it to reduce the risk of hospitalisations and deaths among at-risk people by 88%.

Thursday's economic calendar has US initial jobless claims at 1330 GMT, alongside durable goods orders and personal consumption expenditures due at the same time.

Financial markets in the US will be closed on Friday in observance of Christmas, while the London Stock Exchange will close at 1230 GMT. New York will reopen on Monday, but London will remain closed until Wednesday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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