- FTSE 100 rises 109 points
- IAG the top mover as Omicron fears recede
- Tech stocks under the cosh
4.50pm: FTSE finishes well in the green
The FTSE 100 saw a strong advance on Monday, buoyed by the energy sector and positive news about Omicron.
At the close, the UK's blue-chip index was up 1.5% to end Monday trading at 7,232 points.
"A weekend report on Omicron cases in Gauteng brings hope that we will be able to avoid a major global lockdown," senior market analyst at IG, Joshua Mahoney wrote.
"While we could see monetary policy hold back tech stocks, we are looking increasingly likely to stage a Santa rally. Airlines stocks on the rise as countries slowly realise that travels restrictions are hopeless when you have community transmission of a highly contagious virus."
3.50pm: FTSE 100 led beyond 7,200 by IAG but Scottish Mortgage misses out as US tech stocks take a hammering
It has been a promising start to the week for London’s blue chips, as investors dare to hope that the Omicron variant of Covid-19 will not be too dangerous.
The FTSE 100 at 7,232 has not only breezed past the 7,200 mark but it has racked up a triple-digit gain of 109 points (1.6%).
British Airways owner IAG was the index’s best performer with a 6.8% rise to 140.62p, signalling a growing belief that further pandemic-inspired travel restrictions will not be needed.
On the down side, Scottish Mortgage Investment Trust PLC (LSE:SMT) shed 1.3% at 1,379p as tech stocks took a hammering stateside.
2.45pm: Tech stocks dive in US trade
US indices opened mixed, as expected, with the tech-heavy Nasdaq Composite off 101 points (0.7%) at 14,984 while the Dow Jones was up 486 points (1.4%) at 35,065 and the S&P 500 was 26 points heavier (0.6%) at 4,564.
“The (more traditional) markets remain in an overall holding pattern, with stocks and crude oil managing to regain some ground so far in this first day of the new week after their recent falls. Gold remains subdued, held back by a strong dollar and slight positive tone in the equities space. Cryptos remained the standout losers today,” summarised Fawad Razaqzada at ThinkMarkets.com.
“Bitcoin’s strong correlation with the stock markets over the past year or so means it hasn’t been able to decouple itself during the recent turmoil we have seen on Wall Street and elsewhere. Cryptocurrencies are unlikely to see stimulus-driven inflows similar to last year if we see new virus-linked lockdowns, given that some major central banks are printing QE [quantitative easing] at or near full throttle while governments have exhausted fiscal support during the pandemic,” he continued.
Bitcoin is off by US$1,121, or 2.3%, today at US$48,154.
“Indeed, most of the attention remains on Omicron. While cases of the new Covid variant have been rising across the world, question marks remain as to whether the current vaccines are effective and exactly how transmissible Omicron really is,” Razaqzada said.
In London, the FTSE 100 was 85 points higher (1.2%) at 7,209.
2.05pm: Footfall at shops on the rise but Omicron is a looming concern
Footfall in UK shops rose 0.7% last week compared to the week before, according to Springboard, the market research firm.
Shopping centres and retail parks were responsible for the increase in shopping visits, with footfall at the former up 2.3% and at the latter up by 1.3%, Footfall on high streets fell by 0.4% week-on-week.
Footfall in Central London, something of a ghost town (albeit one not worthy of a song by The Specials) since the pandemic, was up 0.5%, thanks to a 1.8% increase in footfall at areas that were especially focused on meeting Christmas shopping news, Springboard said.
The fly in the ointment was the early impact of the Omicron strain of Covid-19 with Springboard reporting a 2% in its Central London Back to the Office Benchmark.
Omicron variant reveals first signs of hesitancy amongst office workers in Central London and cities elsewhere
Subscribe to our weekly #insights and keep up to date with the latest, most comprehensive industry #data.https://t.co/ZnEQBObTGh pic.twitter.com/DTSttw7iE5
— Springboard (@Springboard_) December 6, 2021
“Footfall in UK retail destinations last week was inevitably more subdued last week than the previous week which had included Black Friday,” said Diane Wehrle, Springboard’s insights director.
“Springboard’s Central London Back to the Office benchmark (comprising only those areas in close proximity to offices) declined last week from the week before, whilst footfall across Central London as a whole – which is clearly being supported by the Christmas trading period – increased, rising by even more in those areas with a predominance of retail stores.
“The picture is not as positive in large city centres outside of the capital where footfall dropped by nearly double the rate of decline in the Back to the Office Benchmark,” she added.
The FTSE 100 was up 86 points (1.2%) at 7,209.
1.30pm: Knocking on the door of 7,200
The Footsie is knocking on the door of 7,200 – it’s just a rounding error away – with a 78 point (1.1%) rise, thanks largely to resource stocks.
Miner Anglo American PLC (LSE:AAL), up 3.3% at 2,806p, is the top blue-chip performer with oil giants BP PLC (LSE:BP.) and Royal Dutch Shell PLC (LSE:RDSB) not far behind, as commodity prices head north on hopes that the Omicron strain of Covid-19 will not prove as dangerous as initially feared.
Among the mid-caps, Clarkson PLC is 5.2% firmer at 3,875p after the shipping services provider said it had enjoyed continued strong trading in the second half of 2021, as a result of which underlying full-year profits are expected to be ahead of current market expectations at not less than £65mln.
Victrex PLC (LSE:VCT), up 2.9% at 2,422p, was also going well after it released its full-year results. Underlying prrofit before tax was up 21% year-on-year and dividends have been returned to pre-Covid-19 levels, with the company also announcing a special dividend of 50p per share.
12.10pm: US stocks set for a mixed start
US stocks look set for a mixed start to the new week after Friday's drop, with disappointment over November US payrolls balanced by signs that worries over the coronavirus Omicron variant have eased slightly.
Futures for the Dow Jones Industrial Average futures added 0.7% on Monday, recovering after Friday's falls, but those for the S&P 500 edged up less than 0.1%, and tech-laden Nasdaq-100 futures fell 0.5%. Pre-weekend, the Dow shed 0.2%, while the S&P 500 index lost 0.8%, and the Nasdaq Composite dropped 1.9%.
Markets have been volatile over the past few weeks amid conflicting signals from scientists and vaccine makers regarding the severity of the Omicron variant and how well existing vaccines may work against it.
However, some positive news emerged over the weekend when a small study of people hospitalized from Omicron in South Africa found a pattern of milder illness than in previous waves of coronavirus (COVID-19), though scientists remained cautious noting the limited size of the study.
US chief medical adviser Anthony Fauci told CNN over the weekend that there does not appear to be a “great deal of severity” to Omicron, adding the same caveat.
Meantime, regulators said Sunday that the US Food and Drug Administration planned to streamline authorization for revamped vaccines, and President Biden outlined plans for combating Omicron, which includes access to booster shots for all adults, a mask mandate on public transportation and tightened rules for international travellers.
Meanwhile, Bitcoin and other cryptocurrencies edged higher after a weekend sell-off.
Marcus Sotiriou, sales trader at the UK-based digital asset broker GlobalBlock commented: "The crypto markets took a nosedive in the early hours of Saturday morning as a global rout across all risk assets took hold. Bitcoin fell from $53,890 to $42,000 approximately, causing most altcoins to collapse with it. This drop blindsided a large amount of investors, as many were expecting a rally going into year-end. However, digital asset markets have seen huge amounts of selling from crypto ‘whales’ who have been moving Bitcoin from the wallets and depositing to exchanges at a staggering rate."
In London, the FTSE 100 has kicked on and is up 68 points (1.0%) at 7,191.
11.15am: New car registrations rise (against weak year-ago comparatives)
Electric vehicles drove an increase in new car registrations in November, the Society of Motor Manufacturers and Traders (SMMT) revealed.
There were 115,706 new cars registered in November, up 1.7% on the same month of last year, when lockdown restrictions hit car sales. The SMMT noted that November 2021’s figure was 31.3% below the pre-pandemic five-year average as semiconductor shortages constrain supply but at least the year-on-year rise brought to an end four consecutive months of decline.
Plug-in cars represented 28.1% of the market in November, with 21,726 battery electric vehicle (BEV) registrations and 10,796 plug-in hybrids (PHEV).
“Year-to-date, 1,538,585 new cars have been registered, of which 17.5% have been BEVs or PHEVs, meaning one in six new cars is capable of being plugged in. When combined with hybrid electric vehicles (9.0% share), more than a quarter (26.5%) of the new car market during 2021 has been electrified,” the SMMT said.
“Despite this uptake in demand for plug-in vehicles, new SMMT analysis this month revealed that the pace of on-street public charging infrastructure is lagging, with the number of plug-in cars potentially sharing a public on-street charger deteriorating from 11 to 16 between 2019 and 2020 and just one standard on-street public charger installed for every 52 new plug-in cars registered over the course of this year,” the industry body added.
“What looks like a positive performance belies the underlying weakness of the market. Demand is there, with a slew of new, increasingly electrified, models launched but the global shortage of semiconductors continues to bedevil production and therefore new car registrations,” said Mike Hawes, the SMMT’s chief executive.
“The industry is working flat out to overcome these issues and fulfil orders, but disruption is likely to last into next year, compounding the need for customers to place orders early. The continued acceleration of electrified vehicle registrations is good for the industry, the consumer and the environment but, with the pace of public charging infrastructure struggling to keep up, we need swift action and binding public charger targets so that everyone can be part of the electric vehicle revolution, irrespective of where they live,” he added.
The FTSE 100 was up 45 points (0.6%) at 7,167, helped by buoyant oil stocks, which are wanted on the back of surging oil prices; both BP PLC (LSE:BP.) and Royal Dutch Shell PLC (LSE:RDSB) are up 2.1%.
Brent crude for February delivery is up US$1.61 at US$71.49 a barrel.
10.30am: Commercial building leads resurgence in construction activity
The UK construction sector saw “a welcome combination of faster output growth and softer price inflation,” according to Tim Moore, the director at IHS Markit, which compiles the construction sector data on behalf of the Chartered Institute of Procurement & Supply (CIPS).
UK Markit/CIPS Construction PMI Nov: 55.5 (exp 54.2; prev 54.6)
— Mario Deloris (@Jamary_Luis) December 6, 2021
“Commercial building led the way as recovering economic conditions ushered in new projects, which helped compensate for the recent slowdown in house building. Major infrastructure work also boosted construction activity in November, as signalled by the fastest growth in the civil engineering category since August,” Moore said.
"Input price inflation remains extremely strong by any measure, but it has started to trend downwards after hitting multi-decade peaks this summer. The latest rise in purchasing costs was the slowest since April, helped by a gradual turnaround in supply chain disruption and a slight slowdown in input buying. Port congestion and severe shortages of haulage capacity were again the most commonly cited reasons for longer lead times for construction products and materials,” he added.
More good news on the UK economy (and another sector where #BrexitBritain is outperforming Germany and France): the #construction PMI climbed to 55.5 in November, from 54.6 in October, with supplier delays and price pressures easing...
More here: https://t.co/ZI6hPIpeWi https://t.co/rpJxAQbQjD
— Julian Jessop (@julianHjessop) December 6, 2021
Duncan Brock, group director at CIPS, said UK construction enjoyed a rebound in November.
"Commercial orders were the strongest, picking up the slack from the subdued housing and civil engineering sectors and demonstrating that business confidence in the UK economy was improving,” Brock said.
"Adding to this positivity was signs of recovery in supply chain performance with just 47% of construction firms reporting longer waiting times, which is the smallest number for eight months. Even with this glimmer of hope that the pressure on deliveries was easing, purchasing remained at higher level to counteract disruptions from ongoing driver shortages and port delays as supply chain managers bought more than their immediate need.
"Job hiring growth was still maintained in November but was the weakest since March. Builder optimism was somewhat flat as the costs of building still remained high and firms struggled to stay competitive,” he added.
The FSE 100 ebbed a bit following the release of the data to 7,168, up 46 points (0.7%).
9.45am: Construction activity rises slightly more than expected in November
The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) for November rose to 55.5 from 54.6 in October.
Any figure above 50 indicates an expansion in activities.
A steeper rise in commercial construction PMI at 56.5 helped offset a sight showdown in house building growth (54.7, down from 55.4), revealed IHS Markit, which compiles the results from the survey.
Civil engineering was the weakest performing area in November (53.9), although the latest rise in activity was the largest since August, it added.
The FTSE 100 was up 55 points (0.8%) at 7,177.
9.05am: Aerospace and hospitality stocks back in favour
Aerospace and hospitality stocks are driving early progress by the Footsie.
London’s index of heavyweight shares was up 56 points (0.8%) at 7,178.
Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF), up 2.9% at 2,261p, is actually the top performer, adding to Friday’s sharp rise but there is also a lot of love for stocks attuned to the fortunes of the airline industry such as Melrose Industries PLC (LSE:MRO, OTC:MLSPF) and British Airways owner International Consolidated Airlines Group (LSE:IAG) SA; the former is 2.7% firmer and the latter is 2.0% to the good.
Hotelier InterContinental Hotels Group PLC, up 1.7% at 1,674.8p, is also in demand, suggesting that fears over the impact of the Omicron strain of Covid-19 are receding.
A couple of FTSE 100 constituents have announced acquisitions this morning, neither of which looks set to be transformational (or even transformative).
London Stock Exchange Group PLC (LSE:LSEG) was 1.4% better at 6,614p after it agreed to acquire Quartile Group, a provider of portfolio, margin and capital optimisation and compression services for the global financial services market.
Marketing and advertising giant WPP PLC (LSE:WPP) is perhaps not as rabidly acquisitive as it used to be but it still loves a bolt-on (so to speak) and it has acquired a majority stake in branding and design agency Made Thought.
WPP shares were 0.3% higher at 1,068p in early deals.
8.40am: The week gets off to a good start
The FTSE 100 got out of the blocks fairly quickly at Monday’s open as fears over potential widespread social and economic chaos from the Covid Omicron variant faded.
Doctors in South Africa have suggested the main threat to life still resides with Delta mutation, as has Dr Anthony Fauci, chief medical advisor to president Joe Biden.
The rebound followed a lacklustre end to the week on both sides of the Atlantic.
“US stocks also underwent a collective bout of vertigo, sliding for the second week in succession, in a sign that suggests we might be at risk of further losses as we head towards next week’s central bank meetings, from the Federal Reserve, Bank of England and European Central Bank,” said Michael Hewson, an analyst at CMC Markets.
“Given how well markets have performed this year, and liquidity likely to diminish the nearer we get to the Christmas period, there is a risk that what we are seeing from investors is a collective ‘what we have we hold’ attitude to risk management, with the prospect that we might see further profit-taking in the days ahead, especially if this week’s US CPI report for November surges to a new 31-year high.”
Barclays Capital was quick of the mark Monday with an upgrade and a downgrade in the housebuilding sector. Moving to ‘equal-weight’ from ‘underweight’ was Berkeley, unchanged, while Persimmon fell just under 1% after Barclays’ move to ‘underweight’ from ‘overweight’.
Abrdn, the asset manager, life and pensions group, was off 1.5% after Morgan Stanley (NYSE:MS) cut its call to ‘underweight’.
Rio Tinto was off by the same quantum as JP Morgan moved ‘neutral’ from ‘overweight’.
British Airways owner IAG, up 1.5%, appeared buoyed by the better news on Covid, which may positively impact global travel.
6.50 am: Bright start predicted
The FTSE 100 looks set to make a positive start to proceedings amid reports the Omicron Covid variant may be far less of a threat to life than first feared.
While cases of the new variant have doubled in a day here in the UK to 86, South Africa’s health minister, Joe Phaahla, said the majority of patients seen by doctors in his country have had “mild” symptoms.
The US said early indications suggest the mutation may be less dangerous than delta, which continues to drive a surge of hospitalisations.
Wall Street ended the week in the red after posting disappointing jobs data but looks set to bounce back amid hopes the world will escape widespread winter economic damage from Omicron.
Asia’s main markets were mixed with the potential collapse of Evergrande, the property firm that has been on the brink now, casting a pall over Hong Kong’s Hang Seng.
“The property sector faces another reckoning this week as well after Evergrande announced on Friday it had received a US$260 million repayment demand, and that it could not guarantee it would be able to meet liabilities going forward,” said Jeffrey Halley, Asia markets analyst at OANDA.
“That led to the Guangdong local government ‘sending in a team’ to help manage operations.”
Looking further ahead here in the UK, we are expecting scheduled news from Rolls Royce, AB Foods, Ashtead and British American Tobacco ahead.
Around the markets
- Pound US$1.3229 (flat)
- Bitcoin US$48,787.40 (down 1.42%)
- Gold US$1,784.70 (flat)
- Brent crude US$ 71.58 (+2.41%)
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were mixed on Monday as four new stocks, including Chinese technology giants JD and Netease, were added to Hong Kong’s Hang Seng index.
This update increases the number of stocks on the benchmark index to 64, from 60 stocks previously.
Hang Seng slumped 1.76% on Monday's trade and China’s Shanghai Composite dipped 0.48%.
The Nikkei in Japan slipped 0.366% while South Korea’s Kospi rose 0.17%.
Australia’s S&P/ASX200 closed 0.05% higher at 7245.1 points with the tech stocks closing 2.2% lower while both consumer staples and utilities made strong gains.