LONDON MARKET OPEN: Travel stocks hit as Omicron fears intensify

(Alliance News) - Stock prices in London opened sharply lower on Monday with shares in airlines taking the biggest hit as holiday plans are thrown into doubt by government responses to the spread of the Omicron variant of Covid-19.

The FTSE 100 index was down 137.70 points, or 1.9%, at 7,132.22 early Monday. The mid-cap FTSE 250 index was down 434.23 points, or 1.9%, at 22,346.44. The AIM All-Share index was down by 7.86 points, or 0.7%, at 1,160.42.

The Cboe UK 100 index was down 1.9% at 707.37. The Cboe 250 was down 1.8% at 19,811.40, and the Cboe Small Companies was down 0.2% at 14,799.29.

In mainland Europe, the CAC 40 stock index in Paris was down 2.5%, while the DAX 40 in Frankfurt was down 2.2%.

New coronavirus measures before Christmas have not been ruled out by UK Health Secretary Sajid Javid, who said there are "no guarantees" following a "sobering analysis" from scientific advisers warning about the threat from Omicron.

Javid said while there remains uncertainty about the new variant, it is time to be "more cautious" amid the rapid spread of the strain.

In the FTSE 100, Rolls-Royce was among the worst performers, down 3.8%, despite securing an agreement with Qatar Investment Authority to invest GBP85 million in new venture Rolls-Royce Small Modular Reactor.

Rolls-Royce SMR will construct mini nuclear reactors - a tenth the size of current ones - that each can power a million homes. QIA will take 10% of the equity in the venture, joining BNF Resources UK and Exelon Generation as shareholders alongside Rolls-Royce.

Rolls-Royce said the SMR business is now fully funded, having secured GBP490 million through commercial equity and UK government grants.

British Airways-parent International Consolidated Airlines was down 3.1% as Omicron travel curbs look set to leave Europe's winter season in tatters.

Midcap travel stocks Tui, Wizz Air and easyJet were down 4.0%, 3.8% and 2.5% respectively. AIM-listed Jet2 was off 2.6%.

Over the weekend, the Netherlands announced a strict lockdown over Christmas amid concerns over the Omicron coronavirus variant.

France banned UK holidaymakers entering the country from Saturday, as it tightened border restrictions in response to the spread of the Omicron variant in Britain.

Further, Germany's health authority announced late Saturday that Britain had been added to its list of Covid high-risk countries, which will mean tighter travel restrictions.

Standard Chartered was down 1.5% after the emerging markets-focused lender was fined GBP46.6 million over failings in reporting its liquidity position between March 2018 and May 2019, a UK watchdog said.

The Prudential Regulatory Authority said that while the Standard Chartered's liquidity position was ahead of requirements, the bank made "five errors" when reporting liquidity metrics.

The regulator, part of the Bank of England, had imposed a temporary additional liquidity expectation on StanChart back in 2017, in relation to concerns over the heightened risk of dollar-denominated outflows.

In Asia on Monday, the Nikkei 225 index in Tokyo closed down 2.1%. In China, the Shanghai Composite ended down 1.1%, while the Hang Seng index in Hong Kong closed down 2.0%. The S&P/ASX 200 in Sydney lost 0.2%.

The pound was quoted at USD1.3209 early Monday, down from USD1.3270 at the London equities close Friday.

The euro was priced at USD1.1253, down from USD1.1275. Against the Japanese yen, the dollar was trading at JPY113.34, down from JPY113.58.

Brent oil was quoted at USD71.10 a barrel Monday morning, down sharply from USD73.70 late Friday. Gold stood at USD1,799.23 an ounce, down from USD1,803.50.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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