LONDON MARKET OPEN: Muted open as record house prices ignored

(Alliance News) - Stock markets in Europe were flat on Thursday morning, with London unable to take inspiration from a report of record house prices in the UK.

Omicron continued to dominate headlines, with fears that surging cases around the globe may still lead to government lockdowns in January. The World Health Organization on Wednesday warned that a "tsunami" of infections could push health systems to the brink of collapse.

The FTSE 100 index was down 9.63 points, or 0.1%, at 7,411.06 early Thursday. The mid-cap FTSE 250 index was down just 6.08 points at 23,511.19. The AIM All-Share index was down just 0.43 of a point at 1,201.37.

The Cboe UK 100 index was down 0.1% at 735.47. The Cboe 250 was slightly lower at 20,930.89. The Cboe Small Companies was down 0.1% at 15,265.13.

In mainland Europe, the CAC 40 stock index in Paris was marginally lower and the DAX 40 in Frankfurt was up 0.1%.

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. Monthly, 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.

In March 2021, UK Chancellor of the Exchequer Rishi Sunak extended the stamp duty cut to the end of June at a GBP500,000 nil rate band, which was then tapered to a GBP250,000 threshold until the end of September.

"Prices are now 16% higher than before the pandemic struck in early 2020," Gardner added.

"It appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax. The Omicron variant could reinforce the slowdown if it leads to a weaker labour market. Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence."

In London, housebuilders Persimmon and Barratt Developments gained 0.5% and 0.3%, respectively, while property developers Land Securities and British Land added 0.4% and 0.2%.

Harbour Energy was 1.3% higher. It has completed the drilling of the Dunnottar exploration well in licence P2399 in the UK North Sea.

The well reached a total measured depth of 15,639 feet, finding hydrocarbon-bearing intervals in the Palaeocene, Jurassic and Triassic.

Harbour will now assess the "commerciality of these marginal accumulations". In the meantime, the well will be plugged and abandoned.

Creightons advanced 8.1%. 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. Administrative expenses rose 6.3% to GBP8.5 million from GBP8.0 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.

On AIM, Eurasia Mining added 4.1% as it progresses its strategy within the hydrogen and ammonia markets following the securing of a number of agreements set to aid project development.

The Russia-focused mining and mineral exploration company said they had signed a joint venture agreement with H4Energy Joint-Stock Co to develop hydrogen and ammonia projects at its Kola and Sakhalin projects.

Support for the development of the projects was secured from the Deputy Prime Minister of Russia - Presidential Envoy to the Far Eastern Federal District, Yury Trutnev.

President Energy slumped 19% as its spin-off Atome Energy started trading on AIM, having raised GBP6 million in its initial public offering with an option for GBP3 million more.

Shares were sold in a placing and via PrimaryBid at 80 pence each, giving Atome a market capitalisation of GBP26 million on admission. The shares hit 85p, up 6.3%, in early trading.

Atome said it is the first London Stock Exchange listing focused solely on producing green hydrogen and ammonia, with projects in Iceland and Paraguay.

President Energy said it retains a 27.9% stake in Atome, with other Atome shares distributed directly to President Energy shareholders as a dividend in specie. President said it will given an update on its remaining conventional oil and gas business in the new year, adding that operations are in line with expectations.

Brent oil was quoted at USD79.06 a barrel Thursday morning, up from USD78.22 at Wednesday's equities close in London. Gold stood at USD1,800.50, down from USD1,802.90.

The pound was quoted at USD1.3468 early Thursday, down from USD1.3476 at the London equities close on Wednesday.

The euro was priced at USD1.1307, down from USD1.1346. Against the yen, the dollar was trading at JPY115.17, firm from JPY114.95.

In Asia on Thursday, the Nikkei 225 index closed down 0.4% in Tokyo's last trading day of 2021, but over the year the benchmark index rose nearly 5% to its highest annual close since 1989. Tokyo trading will take a break on Friday and Monday, resuming on Tuesday for the first session of 2022.

In China, the Shanghai Composite gained 0.6%, while the Hang Seng index in Hong Kong ended slightly higher. The S&P/ASX 200 in Sydney closed marginally higher.

Helping lift sentiment in Hong Kong, Chinese artificial intelligence start-up SenseTime jumped 23% on its debut, despite the company being blacklisted by the US over accusations of aiding genocide in Xinjiang.

The company pulled an initial listing earlier this month after the US Treasury announced sanctions, saying SenseTime was part of China's "military-industrial complex" that provides technology for mass surveillance in the northwestern Chinese province.

Washington said SenseTime's facial recognition software, which can determine a person's ethnicity, was designed in part to be used against Uyghurs and other mostly Muslim minorities in Xinjiang.

Weighing on investor sentiment, however, shares in embattled Chinese property giant Evergrande tumbled 10% after a report the group had failed to meet two more offshore payments.

Still to come Thursday is the weekly US initial jobless claims print at 1330 GMT.

Oanda analyst Jeffrey Halley said: "The US initial jobless claims will be of passing interest, a fall below 200,000 for the weekly number likely reinforcing the bullish sentiment dominating markets.

"Far more important will be China's official manufacturing and non-manufacturing PMIs for December released tomorrow morning. We should get a very binary outcome, up or down, on a decent deviation from the forecast 50.50 and 52.5 respectively. Otherwise, I expect the modestly bullish risk appetite washing through asset classes to continue as holiday season markets continue."

By Paul McGowan; paulmcgowan@alliancenews.com

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