LONDON MARKET OPEN: FTSE 100 rebounds but Omicron uncertainty lingers

(Alliance News) - European started the new week in a better mood as investors continue to digest the economic implications the new coronavirus strain, Omicron, which sparked last week's sell-off.

Some of Friday's hard-hit stocks, such as oil majors, saw some respite on Monday as fears calmed somewhat.

"The fluidity of the situation as knowledge of the Omicron variant increases over the coming weeks will, however, keep investors on high alert," warned Richard Hunter, head of markets at interactive investor.

The FTSE 100 index was up 55.98 points, or 0.8%, at 7,100.01 early Monday. The mid-cap FTSE 250 index was up 300.86 points, or 1.3%, at 22,838.75. The AIM All-Share index was up 7.88 points, or 0.7%, at 1,189.50.

The Cboe UK 100 index was up 0.8% at 704.16. The Cboe 250 was up 1.2% at 20,307.84, and the Cboe Small Companies up 0.4% at 14,782.48.

In mainland Europe, the CAC 40 in Paris was up 1.0%, while the DAX 40 in Frankfurt was up 0.9% early Monday.

European markets were rebounding Monday from Friday's dramatic sell-off, which had been set off by worries over a new coronavirus variant. The new strain, now known as Omicron, has cast doubt on global efforts to fight the pandemic, due to fears that it is highly infectious and could potentially evade vaccines.

Several countries have announced plans to restrict travel from southern Africa, where it was first detected, including key travel hub Qatar, the US, Britain, Saudi Arabia, Kuwait and the Netherlands.

But the virus strain has already slipped through the net and has now been found everywhere from the Netherlands to Hong Kong. In Australia, authorities on Sunday said they had detected it for the first time in two passengers from southern Africa who were tested after flying into Sydney.

The UK has tightened up its internal virus rules in response, with face coverings becoming mandatory on public transport and in shops and other settings, including banks, post offices and hairdressers, from Tuesday morning. Isolation rules also then will return for international arrivals until they receive a negative PCR test for Covid-19.

Despite the reintroduction of rules, UK Health Secretary Sajid Javid told families they should plan for a great Christmas "as normal" and insisted it was "nowhere near" time to reintroduce social distancing rules and work-from-home guidance.

Sparking some hope were comments from a South African doctor who raised the alarm over Omicron, who said dozens of her patients suspected of having the new variant had only shown mild symptoms and recovered fully without hospitalisation.

The downbeat mood persisted in Asia on Monday, with the Nikkei 225 index in Tokyo ending down 1.6%. Japan will reinstate tough border measures, barring all new foreign arrivals over the Omicron Covid variant, Prime Minister Fumio Kishida announced Monday, just weeks after a softening of strict entry rules.

Against the yen, the dollar rose to JPY113.34 versus JPY113.24.

In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong ended down 1.0%. The S&P/ASX 200 in Sydney closed down 0.5%.

Sterling was quoted at USD1.3334 early Monday, firm on USD1.3322 at the London equities close on Friday. The euro traded at USD1.1270, lower than USD1.1315 late Friday.

Gold prices slipped. The safe-haven asset was quoted at USD1,795.84 an ounce early Monday, soft against USD1,799.30 on Friday.

Oil prices staged a minor recovery after getting hammered last week over worries that the new variant will spark lockdowns across the world, hitting fuel demand. Brent oil was trading at USD76.01 a barrel early Monday, higher than USD73.54 late Friday.

Oil majors rebounded, with BP shares up 2.3% and Royal Dutch Shell 'A' and 'B' stock up 1.6% and 1.7% respectively.

BT was at the top of the FTSE 100, up 7.1% after Indian newspaper the Economic Times reported that Reliance Industries is mulling a bid for the UK-listed telecommunications firm.

At the top of the FTSE 250 was WH Smith, rising 5.1% after tumbling 14% on Friday. The stock, which has outlets at airports and train stations, was hit last week by worries that the new coronavirus variant will slam the travel sector.

Other travel-exposed stocks were not so lucky. British Airways-parent International Consolidated Airlines was flat after a 15% dive on Friday, and budget airline easyJet was up just 0.1% after Friday's 11% fall.

Elsewhere in London, Marshall Motor shares jumped 46% to 400p after Constellation Automotive Holdings made a takeover offer at that price. This followed Marshall Motor late Friday confirming that Marshall of Cambridge Holdings, which holds a 64% interest in Marshall Motor, is considering a possible sale of its entire stake in the company.

Amigo tumbled 20%. The guarantor loans provider swung to an interim profit, but warned that the sanction of a new scheme to address historic complaints "is increasingly urgent".

Amigo reported revenue of GBP56.5 million for the half-year to September 30, down 39% from GBP92.3 million a year ago. However, it swung to a pretax profit of GBP2.1 million from a loss of GBP62.6 million year-on-year. This was as total operating expenses were slashed to GBP18.8 million from GBP116.2 million.

Commenting on its scheme to address customer complaints, Amigo said approval remains subject to key milestones such as a second successful creditor vote and approval by the High Court at a sanction hearing.

"At this point, the board does not consider there to be enough certainty to account for claims redress on the basis that a scheme will be sanctioned," the company warned, adding it will be proposing an equity raise alongside the scheme to support the future business.

Monday's economic calendar has eurozone consumer confidence at 1000 GMT and German inflation at 1330 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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