- FTSE 100 closes 2.5 points lower
- US stocks mixed in morning trade
- Santa rally masked by Omicron
4.55pm: Footsie treads water
The FTSE 100 index closed fractionally higher on Wednesday, consolidating the recent rebound as fears over the Omicron coronavirus variant recede even though Wall Street made mixed progress.
At the close, the UK blue-chip index was 2.55 points, or 0.01% lower at 7,337.35, below the day's peak of 7,378.92 but above the session low of 7,333.56.
On Wall Street, around London’s close, the Dow Jones Industrials Average was down 80 points, or 0.2% at 35,638, while the broader S&P 500 index shed 0.1%, though the tech-laden Nasdaq Composite added 0.3%.
Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: “The knee-jerk reaction to the new variant was obviously overdone based on the information we now have but where the markets will end up is anyone's guess. There's still plenty more to learn. Of course, investors love to buy those dips so no one would be surprised if we were in the early stages of this year's Santa rally."
He added: "There are so many different risk factors to contend with right now. Just as Covid appeared to take a back seat for much of the last few months, there's now far less talk of inflation risks and interest rates. Markets are now pricing in little chance of a rate hike next week from the BoE and a faster taper from the Fed also looks less certain.
"Is the market going to reward such caution from the central banks or will inflation fears take over again and push real yields lower. That would certainly be great for gold prices in the near term but could make for some nervous times next year. As has been said so often recently, central banks are stuck between a rock and a hard place and life isn't getting any easier for them."
4.00pm: Wall Street dips into the red
Leading shares are heading for another day of positive gains, but the move higher is fairly tentative at this stage so nothing can be taken for granted.
The prospect of further restrictions under the government's Plan B - whether to distract from the Christmas party row or not - has taken some of the shine off the market.
A dip into the red by Wall Street has not helped. The Dow Jones Industrial Average is now down 45 points, while the S&P 500 is off 4 points and the Nasdaq Composite 17 points lower.
So the FTSE 100, having earlier climbed as high as 7378.92, now sits at 7345.81, up just 5.91 points.
A positive response to the latest update from The Berkeley Group Holdings PLC (LSE:BKG) has seen the housebuilder's shares gain 3.54%, making it the biggest riser in the leading index.
Croda International PLC (LSE:CRDA) has climbed 2.04% to 10,260p after positive news on the effect of the Pfizer/BioNTech vaccine on the omicron variant. Croda is a lipid supplier to Pfizer for the vaccine.
An upgrade by UBS analysts from neutral to buy with a target price raised from 9000p to 11,500p has also helped Croda.
Safe haven utility companies are also in demand, with Severn Trent PLC (LSE:SVT) adding 1.63% and United Utilities Group PLC (LSE:UU.) up 1.31%.
Airlines are suffering on concerns about the effect on travel of any new restrictions.
British Airways owner International Consolidated Airlines Group (LSE:IAG) is down 0.42% while easyJet plc (LSE:EZJ) has fallen 1.23%, although both have recovered from their worst levels.
The pound is at a year low against the dollar, on the basis that the arrival of the new variant means the Bank of England is unlikely to raise interest rates at this month's meeting.
3.14pm: US job openings rise
The US has more than 11mln unfilled vacancies according to the latest official figures, more than expected.
The Jolts job openings came in at 11.03mln compared to expectations of a 10.46mln figure.
US JOLTs Job Openings Oct: 11033K (est 10469K; prev R 10602K)
— LiveSquawk (@LiveSquawk) December 8, 2021
The increase in job openings was concentrated in accommodation & food services as employers felt more comfortable hiring with the Delta wave starting to wane in Oct. Remains to be seen whether that will continue in Nov given the slow #jobsreport we saw last Fri.#JOLTS 2/ pic.twitter.com/loz6N6fnHm
— Daniel Zhao (@DanielBZhao) December 8, 2021
2.54pm: Pfizer lifted by vaccine results on omicron
US stocks have made a muted but positive start after the rally that was seen in the first two days of the week.
The Dow Jones Industrial Average is up around 21 points at 35,740.88 in early trading in New York.
The S&P 500 gained around five points at 4,692, while the tech-heavy Nasdaq index added around 35 points at 15,722.
Shares in Pfizer advanced 0.5%, while BioNTech shares gained nearly 4% in Frankfurt as the pair reported initial results that showed that their COVID-19 vaccine neutralized the omicron variant of the coronavirus after three doses, or the full two-dose regimen plus a booster.
Back in the UK the FTSE 100 is managing to keep its head above water, up 14.54 points or 0.2% at 7354.44.
1.42pm: Mid-cap index underperforms
Leading shares are hovering in positive territory despite the prospect of further UK restrictions.
The FTSE 100 is currently up 17.78 points or 0.24% at 7357,68, albeit off its high of 7378.
The mid-cap FTSE 250 is underperforming the blue chip index but is still just ahead, up 0.13% at 23,268.
It is being weighed down by the big falls in travel and leisure stocks, hit by the prospect of the government's Plan B hitting consumer confidence.
12.21pm: US tech stocks forecast to extend gains
US stocks are expected to open higher, with tech shares likely to extend their gains following the equity market's best day since March as concerns about the new coronavirus (COVID-19) omicron variant ease due to the milder symptoms that have been reported.
Futures for the Dow Jones Industrial Average added 0.49% in Wednesday pre-market trading, while the broader S&P 500 index gained 0.45% and those for the tech-heavy Nasdaq 100 added 0.39%.
Stocks rallied on Tuesday, led by a 3% gain for the Nasdaq to 15,687. The Dow added 1.4% to 35,719, while the S&P 500 rose 2.1% to 4,687.
Shares of Apple Inc (NASDAQ:AAPL) (Apple Inc (NASDAQ:AAPL)) advanced nearly 4% after Morgan Stanley (NYSE:MS) (Morgan Stanley (NYSE:MS)) increased its target price on the stock to $200 per share, citing the consumer electronics giant’s commitment to developing augmented and virtual reality technology.
Meanwhile the FTSE 100 has recovered some ground and is now up 19.01 points or 0.26% at 7358.91
11.34am: TUI comments hit holiday sector
The combination of downbeat comments from holiday group TUI AG (LSE:TUI) and the prospect of new restrictions has hit the travel sector hard.
TUI warned fears over the omicron variant could impact its winter holiday programme, although it predicted bookings for next summer will return to near pre-pandemic levels as vaccination rates continue to rise.
But its shares have fallen 6.35% while Wizz Air Holdings (AIM:WIZZ) is down 6.26%, easyJet plc (LSE:EZJ) has dropped 5.74%, and British Airways owner International Consolidated Airlines Group (LSE:IAG) has lost 5.38%.
Aeroengine maker Rolls-Royce Holdings PLC (LSE:RR.) is off 5.18% and transport group National Express Group PLC (LSE:NEX) is down 4.9%.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ‘’The summer horizon may look rosy, with bookings expected to rebound to pre-pandemic levels, but a bit of a chill has descended on TUI’s winter reservations..The outlook adds another piece to a precarious picture over the next few months for the travel and tourism sector, given uncertainty surrounding the new COVID-19 strain. It’s a particularly disheartening scene given that until worries about the omicron variant surfaced, bookings had been looking much brighter for the winter season...
"The feel good factor has evaporated for British Airways owner IAG, easyJet, Ryanair and Wizz Air amid worries that customers will hold off booking new flights until more information is available about the infectiousness of omicron - due to concerns that tougher travel restrictions may be imposed."
The Plan B talk has also left Cineworld Group PLC (LSE:CINE) 6.94% lower.
11.14am: Plan B to deal with new variant?
Well it was nice while it lasted.
Leading shares have dipped, ever so slightly into negative territory.
There is some talk that new restrictions will be announced by the government to deal with the spread of the omicron variant.
This is the famous Plan B which involves working from home and vaccine passports for large events.
Of course, the cynics are saying such a move is an attempt to deflect from the row over the Downing Street Christmas party last year during lockdown, which the government has been denying till it is blue in the face despite all the evidence to the contrary.
Telling that no minister would appear on TV this morning to be questioned, with health secretary Sajid Javid reportedly pulling out of planned interviews.
The FTSE 100 is down 1.97 points at 7337.93.
10.48am: Sterling slips ahead of latest Bank of England meeting
The pound has dipped as the prospect of a UK interest rate rise later this month recedes.
It had been widely expected that the Bank of England - having rather led the market up the garden path in November - would lift the cost of borrowing at its December meeting.
But the arrival of the omicron variant -albeit seemingly less harmful than first feared - may have put paid to that.
UBS analysts said: "Given the uncertainty related to the omicron variant, we now expect the Bank of England to stay on hold at the next meeting on 16 December.
"Although the recent inflation and labour market data arguably support the case for a rate hike, the latest comments from some monetary policy committee members, in particular Michael Saunders (generally seen as a hawk), suggest that the MPC might prefer to wait for more clarity on Omicron.
"We think that the MPC would be in a better position to gauge the economic fallout from the new variant in the following meeting on 3 February, when it will also present new macro projections. However, we expect the MPC to reiterate next week that it remains of the view that "some modest tightening of monetary policy over the forecast period is likely to be necessary to meet the 2% inflation target sustainably in the medium term".
"Whereas we previously expected the first hike to happen on 16 December, we now change our call towards a first 15 basis point hike on 3 February 2022, followed by two more 25 basis point hikes in May and November 2022 (and two more hikes in 2023).
"However, in the event of a new prolonged lockdown, we see risks of further delays in rate hikes."
Against the dollar, sterling is currently down 0.24% at $1.3212.
The FTSE 100 meanwhile is off its best levels but still up 9.08 points at 734898.
Chris Beauchamp, chief market analyst at IG, said: "The headlong rally in global markets has stalled, but the overall outlook for equities remains firmly positive...the rally that began last Friday seems set to continue, although the real ‘Santa rally’ should still kick in later in the month."
9.57am: Crude dips ahead of latest US inventory figures
Oil prices are marginally lower after recent rises.
Brent crude has edged down 0.4% to US$75.14 a barrel while West Texas Intermediate is off 0.46% at US$71.72.
But it has been rallying as omicron concerns eased, with demand likely to continue rising if the economy is not damaged too much by the new variant.
There have also been indications of falling US inventories.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "The latest API data showed that the US crude inventories fell more than 3 million barrels last week.. The more official EIA data is due today, the expectation is a 1.5-million-barrel decline, and a bigger decline should add to the positive pressure on crude prices. Therefore, risks in energy prices remain tilted to the upside, for both positive demand, and potentially tighter supply perspectives."
9.03am: German markets underperform as Merkel era ends
Leading shares continue to make headway.
The FTSE 100 is now up 30.78 points or 0.42% at 7370.68, its highest level since 12 November.
Victoria Scholar, head of investment, interactive investor, “It is a mixed picture for European markets with the DAX underperforming as Olaf Scholz prepares to take over as German chancellor, marking an end to the almost 16-year Merkel reign. After a stellar session on Tuesday, in a positive indication for UK stocks, the FTSE 100 is extending yesterday’s gains, trading above support at 7,350.”
Earlier Chinese equities hit an 11 week high, despite continuing worries about the country's property market.
Scholar said: "Real estate high yield bonds in China hit record lows this week as the embattled property behemoth Evergrande inches closer to default with contagion risk a threat to China’s financial sector and economy. In another sign of distress for the real estate sector, shares in another Chinese property company, Kaisa were suspended on Wednesday after missing a debt deadline."
8.24am: Berkeley bounces after lifting profit forecast
Housebuilder The Berkeley Group Holdings PLC (LSE:BKG) is the biggest riser in the leading index.
Its shares have jumped 4.19% to 4829p as it raised its profit forecast for the year by 5% after a strong set of interim figures.
Richard Hunter, head of markets at interactive investor, said: “Berkeley endured a difficult pandemic when its heavy exposure to London was both a blessing and a curse, but the indications are that sentiment is improving once more in the capital...
"The early signs are certainly promising. Sales reservations are now ahead of those being seen pre-pandemic and forward sales of £1.7bn provide earnings visibility for the immediate future. The pre-tax return on equity has risen by 4.2% to stand currently at 19.1%, and a 36.3% increase in revenues has driven an improvement of 26% to the pre-tax profit figure. Indeed, the current strength of trading has enabled Berkeley to raise its earnings guidance for the full-year number by 5%...
"The upbeat outlook and accompanying earnings upgrade in this report may signal something of a change in fortunes. It could also mean that the market consensus of the shares, which currently stands at a strong hold, may also be subject to some positive uplift.”
Taylor Wimpey PLC (LSE:TW.) is also ahead, up 1.04% despite news that chief executive Pete Redfern was stepping down after more than 14 years in the role, and would leave the business once a suitable candidate had been found and a full handover taken place.
Elsewhere the overnight rise in the Nasdaq Composite has lifted tech investor Scottish Mortgage Investment Trust PLC (LSE:SMT) by 1.04%.
8.15am: Investors accentuate the positive
Leading shares have edged higher to add to two days of strong gains so far this week.
In early trading the FTSE 100 is up 21.05 points or 0.29% at 7360.95.
The good performance this week came as concerns about the omicron variant appear to have eased. At the same time the mere emergence of the strain seems to have convinced investors that central banks may not raise interest rates as quickly as previously thought.
Hopes that the US debt ceiling can be increased, and the feeling that any collapse of Chinese property giant Evergrande can be contained have also added to the positive mood.
But it is the rebound from the omicron scare that is most evident.
Jim Reid at Deutsche Bank said: "Every day that passes without a wave of severe cases driven by omicron is offering more hope that this won’t be the curveball to throw the recovery off course. Indeed, to get a sense of the scale of the market rebound, both the S&P 500 and the STOXX 600 in Europe have now clocked in their strongest 2-day performances of 2021 so far, with the indices up by +3.27% and +3.76% respectively since the start of the week. Meanwhile, the VIX [volatility index] fell below 25 for the first time in a week."
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "In theory, such strong gains are sign of instability and should be taken with caution, however the good news is that the volatility is easing, and the VIX index dropped 20% yesterday, meaning that the latest fears could slowly begin fading. Yet, the US inflation data due Friday remains an important threat to the market mood, and could encourage some consolidation and perhaps some profit taking into the critical data."
There is also the growing tension between the US and Russia to take into account.
Jim Reid again: "One pretty big news story that markets have been relatively unperturbed by so far is the rising tensions between the US and Russia over Ukraine. Yesterday saw a video call between US President Biden and Russian President Putin. The US readout from the call did not offer much in the way of concrete details, but if you’re looking for any optimistic news, it said that both sides tasked their teams with following up. Setting the background for the call, there were reports immediately beforehand that the US was considering evacuating their citizens and posturing to stop Nord Stream 2 if Russia invaded Ukraine."
6.50am: Markets set to pause for breath
The FTSE 100 is seen very slightly lower start to Wednesday, pausing after a strong start to the week despite Omicron worries.
CFD firm IG Markets this morning see London’s blue-chip benchmark down a couple of points, making the price 7,338 to 7,341 with just over an hour to go until the open.
The positivity and stability of the past couple of days come as markets increasingly shrug off the prior panic about the Omicron Covid variant.
“This week’s price action so far has been a complete contrast to last week’s schizophrenic back and forth,” said Michael Hewson, analyst at CMC Markets.
“The last two days have been ones of unbridled optimism that for all the concerns about Omicron, there is a growing hope that for all the concerns about its greater transmissibility, that any fallout is likely to be mild, and that when it comes to hospitalisations and deaths, the outcomes are likely to be better than Delta.”
Wall Street saw the Dow Jones close Tuesday 492 points or 1.4% higher, at 35,719, whilst the S&P 500 was stronger rising by just over 2% to 4,686.
The Nasdaq gained 3% to finish the session at 15,686 and small cap focussed Russell 2,000 added 2.28%.
Around the markets
Pound: US$1.3250, up 0.05%
Gold: US$1,789 per ounce, up 0.27%
Silver: US$22.50 per ounce, down 0.05%
Brent crude: US$75.18 per barrel, up 2.8%
WTI crude: US$71.70 per barrel, up 3.1%
Bitcoin: US$50,633, down 1.07%
Ethereum: US$4362, flat
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region were higher on Wednesday even as troubles in China’s property sector resurfaced this week.
Property giant Evergrande came back under the spotlight as it looked likely to officially default for the first time.
There was still no word from Evergrande on whether it has paid US$82.5 million worth of interest by the 30-day grace period which ended on Monday.
The Nikkei in Japan surged 1.42% and South Korea’s Kospi rose 0.34%.
China’s Shanghai Composite gained 1.09% while Hong Kong’s Hang Seng index lifted 0.18%,
Australia’s S&P/ASX200 jumped 1.25% to close at 7405.4 points as iron ore climbed 8.3% to US$111.34 a tonne.