LONDON MARKET MIDDAY: Stocks rise as Fauci helps soothe Omicron fear

Mon, 06th Dec 2021 12:16

(Alliance News) - Stock prices in London were mostly higher at midday on Monday following comments from a US government advisor that the Omicron variant has not so far produced severe cases of Covid-19.

Anthony Fauci said Sunday that while more information was needed, preliminary data on the severity of the Omicron strain are "a bit encouraging".

The FTSE 100 index was up 63.78 points, or 0.9%, at 7,185.89. The mid-cap FTSE 250 index was up 80.10 points, or 0.4%, at 22,726.18. The AIM All-Share index was down 3.86 points, or 0.3%, at 1,178.44.

The Cboe UK 100 index was up 1.0% at 712.66. The Cboe 250 was up 0.5% at 20,206.84, and the Cboe Small Companies up 0.1% at 14,801.48.

In mainland Europe, the CAC 40 stock index in Paris was up 0.7%, while the DAX 40 in Frankfurt was up 0.3%.

"Monday brought a solid rise for the FTSE 100 despite the continued spread of the Omicron variant as investors reacted positively to suggestions from officials in the US and South Africa that the latest strain of Covid might carry milder symptoms," commented AJ Bell investment director Russ Mould. "It doesn't feel like we are out of the woods yet, particularly as, even if this definitely proves to be the case, increased transmissibility could mean a wave of hospitalisations from a lower proportion of people getting really sick."

In the FTSE 100, oil majors were among the best performers tracking spot oil prices higher. BP was up 2.3% and Royal Dutch Shell 'A and 'B' shares were up 2.1% and 2.4% respectively.

Brent crude steadied after Saudi Arabia, the world's largest oil exporter, on Sunday raised prices for its Asian and American customers. The Saudi move came shortly after OPEC+ kept production increases modest late last week at a time when Omicron threatens demand for energy.

The North Sea benchmark was quoted at USD71.73 a barrel Monday at midday, up from USD71.43 late Friday.

London Stock Exchange Group was up 0.8% after it agreed to acquire portfolio, margin and capital optimisation services provider Quantile Group. LSEG will pay up to GBP274 million for London-based Quantile. The deal will enable the stock exchange to expand its range of post-trade risk management solutions, it said.

Persimmon was down 1.8% after Barclays double downgraded the UK housebuilder to Underweight from Overweight.

Rio Tinto was down 0.4% after JPMorgan downgraded the Anglo-Australian miner to Neutral from Overweight.

In the FTSE 250, Clarkson was up 5.5%. The shipping services provider guided that results for 2021 will be ahead of current market expectations.

Clarkson said underlying pretax profit is now expected to be "not less than" GBP65 million. It posted underlying pretax profit of GBP44.7 million in 2020.

Victrex was up 3.5% after the speciality chemicals company said it delivered a solid and sustainable recovery during financial 2021, prompting it to declare a special dividend.

For the financial year ended September 30, Victrex posted revenue of GBP306.3 million, up 15% from GBP266.0 million last year and pretax profit of GBP92.5 million, up 46% from GBP63.5 million.

Victrex declared a full year dividend to 59.56 pence, up 29% from 46.14p paid last year. In addition, as a result of its available cash balance exceeding the GBP85 million threshold, Victrex also proposed a 50p share special dividend.

At the other end of the midcaps, Synthomer was the worst performer, down 11%. Morgan Stanley double downgraded the speciality chemicals company to Underweight from Overweight.

Elsewhere in London, Thungela Resources was up 14%. The coal miner said it is likely to return to profitability given strong coal prices and performance after posting a loss last year.

The stock was up 14% in Johannesburg as well.

Thungela said demand for energy, including thermal coal, has continued to improve as the global economy recovers from the Covid-19 pandemic.

Export saleable production for 2021 is expected to be 14.9 million tonnes, subject to no further deterioration in Transnet Freight Rail's performance or more stringent Covid-19 restrictions this month. Export equity sales are expected to be 13.7 million tonnes, hampered by rail constraints.

Thungela said its first dividend will be a final payout for the six months to December 31.

The pound was quoted at USD1.3277 at midday on Monday, up from USD1.3223 at the London equities close Friday.

On the economic front, the UK construction sector activity saw its fastest rate of expansion since July, aided by recovering economic conditions, IHS Markit said.

The IHS Markit-CIPS UK construction purchasing managers' index registered 55.5 points in November, up from 54.6 in October. The latest reading beat the market forecast, cited by FXStreet, of 52.0 points.

Markit said UK construction companies indicated a sharp increase in business activity during November, led by the fastest upturn in commercial work since July as clients continued to boost spending in response to the reopening of the economy.

The euro was priced at USD1.1301 at midday, higher from USD1.1291 late Friday following upbeat PMI data.

Eurozone construction activity grew at the fastest rate for nearly four years in November, survey results from IHS Markit showed, but inflationary and supply chain pressures are clouding the outlook.

Rising to 53.3 points in November from 51.2 in October, the latest eurozone construction total activity index pointed to a further acceleration in activity that was the sharpest since February 2018. Any reading over the no-change mark of 50.0 signals expansion.

Against the Japanese yen, the dollar was trading at JPY113.17, up from JPY113.06 on Friday.

Gold stood at USD1,782.25 an ounce, up from USD1,775.82 late Friday.

US stock market futures were pointed mostly higher as investors weighed uncertainty over the Omicron variant and the prospect of monetary policy tightening from the US Federal Reserve.

The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.1% but the Nasdaq Composite was called down 2.2%.

Last week, Fed Chair Jerome Powell suggested the central bank would likely speed up the phasing out of its bond-buying stimulus programme and then focus on lifting borrowing costs.

"With hawkish comments from Fed Chair Powell, now in his second term, we are very likely to see sustained rate rises in the US from next year. We think this will have more of an effect on the components of market performance than it has this year," said Paul Wild, senior fund manager at JO Hambro Capital Management.

Meanwhile, US digital media company BuzzFeed, known for its viral content and journalism, goes public on Monday after it initially raised less money than expected. In a press release Friday, BuzzFeed said it had finalized a merger with 890 5th Avenue Partners, a special purpose acquisition company, which aims to raise funds through an initial public offering to acquire an existing company.

Buzzfeed's shares are expected to start trading on the Nasdaq on Monday under the ticker symbol BZFD. BuzzFeed aimed to be valued on Wall Street at USD1.5 billion but it raised just USD16 million from the SPAC deal, which was announced in June.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com