LONDON MARKET MIDDAY: Stocks flat with Omicron still front of mind

(Alliance News) - Stock trading in London was struggling for direction midday Thursday, with 2021 limping to the finish line but with investor sentiment improved by reports that Omicron is not as deadly as previous Covid variants.

AvaTrade Chief Market Analyst Naeem Aslam said: "Overall, investors are overjoyed that we are ending 2021 on a high note after a brutal 2020. Although the appearance of the Omicron variant initially alarmed investors, the situation is now likely under control thanks to breakthrough Covid-19 vaccinations and a better understanding of the virus.

"However, the [US] Federal Reserve's aggressive tapering of quantitative easing measures to keep inflation in check could be a major factor driving volatility in stock markets in 2022."

The FTSE 100 index was down just 1.25 points at 7,419.44 midday Thursday. The mid-cap FTSE 250 index was down 12.32 points at 23,504.95. The AIM All-Share index was up 2.99 points, 0.3%, at 1,204.79.

The Cboe UK 100 index was flat at 736.22. The Cboe 250 was 0.2% lower at 20,907.19. The Cboe Small Companies was down 0.4% at 15,228.37.

Markets in France and Germany were similarly narrowly mixed. The CAC 40 stock index in Paris was 0.1% higher but the DAX 40 in Frankfurt was down 0.1%.

US stock index futures were pointed to a slight rise at Thursday's open. The Dow Jones Industrial Average was expected to open slightly higher, S&P 500 0.1% higher, and the Nasdaq Composite up 0.2%.

Marshall Gittler, head of investment research at BDSwiss, said: "It's pretty amazing that confidence keeps rising and stock markets keep going up - the S&P 500 hit its 70th record high this year - even as the virus situation just gets worse and worse."

The World Health Organization on Wednesday warned that a "tsunami" of infections could push health systems to the brink of collapse.

The blistering surge was illustrated by AFP's tally of 6.6 million new infections reported globally in the week ending Tuesday, the highest the figure has been since the World Health Organization declared a Covid-19 pandemic in March 2020.

On a more positive note for the London market, the UK housing sector rounded off a strong year with more double-digit price growth, figures from building society Nationwide showed on Thursday.

In December, house prices rose 10% on a yearly basis, in line with November's surge. On a monthly basis, prices climbed 1.0% in December to an average of GBP254,822, following growth of 0.9% in November.

Nationwide Chief Economist Robert Gardner said it was the strongest year for UK house prices since 2006. In cash terms, 2021 saw the largest single-year house price hike.

UK house prices have been on the upturn since the sector re-emerged from 2020's spring Covid-19 lockdown. It benefited from stamp duty relief put in place in 2020 that was only fully removed this past September.

The pound was quoted at USD1.3484 midday Thursday, firm from USD1.3476 at the London equities close on Wednesday.

The euro was priced at USD1.1320, down from USD1.1346. Against the yen, the dollar was trading at JPY115.13, firm from JPY114.95.

In London, Creightons added 3.1%. The consumer goods firm reported a slip in first half profit but was able to maintain its interim payout amid underlying business momentum.

In the six months to September 30, pretax profit fell 21% to GBP2.3 million from GBP2.9 million, as revenue declined by 7.4% to GBP30.0 million from GBP32.4 million.

Creightons noted its "excellent progress" in the recent half-year in offsetting the loss of one-off hygiene sales worth GBP11.5 million a year before related to the virus pandemic.

"These hygiene sales were very significant so to have substantially replaced in the first half by growth in core sales across branded, private label and contract business units before the full impact of recent acquisitions reflects the underlying strength and momentum of the business," Creightons said.

Despite the drop in revenue and profit, Creightons maintained its interim dividend at 0.15 pence.

Cloudbreak Discovery gained 6.1%. The firm said it is looking forward to an "active" year of testing results from several of its projects.

The Vancouver-based company, which generates exploration and development projects for the natural resource sector, reported a narrowed loss of GBP902,060 in the year that ended June 30 from GBP1.1 million in financial 2020.

Chief Executive Kyler Hardy said: "Since listing on the Main Market earlier this year, Cloudbreak has been successfully executing its business model with 13 out of our 17 assets now optioned to partners. Through our strategic alliance and partnerships, we can expect an active year ahead with sampling and testing results from several projects."

On AIM, Beximco Pharmaceuticals rose 5.5% after it launched what it claims to be the world's first generic version of Pfizer's Covid-19 treatment.

Pfizer's oral therapy Paxlovid was granted emergency use authorisation by the US Food & Drug Administration last week.

The Bangladesh-based generic drug maker noted that Bangladesh's Directorate General of Drug Administration on Thursday also granted emergency use authorisation, which is to treat mild-to-moderate Covid-19 in patients 12 years and older.

Beximco will market the Paxlovid generic under the brand name Bexovid, initially in Bangladesh only.

Pfizer was up 0.7% in pre-market trading in New York on Thursday.

UniVision Engineering sunk 11%, hitting a new low in 2021, as a dispute with a subcontractor held back progress on a major contract, resulting in higher costs that more than halved profit. For the six months that ended September 30, reports pretax profit dropped 64% to GBP142,000 from GB394,000.

The Hong Kong-based CCTV and surveillance system company said that a dispute with a subcontractor over the value of work related to its Mass Transit Railway Corp contract was responsible for the fall.

MTRC is the company's largest customer, with UniVision providing replacement work on CCTV systems and installing CCTV system for numerous railway lines in Hong Kong. Believes that the sub-contractor performing installation works as part of the contract has under-performed tasks.

This, the company noted, had resulted in major delays in the MTRC project and also increased costs, as Univision deployed its own resources to complete the outstanding work. The company also records an impairment of GBP634,000 related to billings to MTRC for a maintenance contract. It took no such hit a year before.

Brent oil was quoted at USD78.67 a barrel Thursday at midday, up from USD78.22 at Wednesday's equities close in London. Gold stood at USD1,803.00, up from USD1,802.90.

Looking ahead, the weekly US initial jobless claims print is at 1330 GMT.

AvaTrade's Aslam said: "Investors will be closely looking at the unemployment claims data to be released by the Department of Labor to understand the health of the labor market, which is a significant factor taken into account by the [US] Federal Reserve when deciding on its future monetary policies."

By Paul McGowan; paulmcgowan@alliancenews.com

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