- FTSE 100 closes 15 points lower
- US markets weak
- Omicron restrictions create concern
4.55pm: Footsie sees mild selling pressure
The FTSE 100 index closed lower again on Thursday as rising Omicron and Delta coronavirus variant cases bring expectations of more Christmas restrictions and crimp the prospects of a Santa rally.
At the close, the UK blue-chip index was 15.79 points, or 0.2% lower at 7,321.26, below the day's peak of 7,366.10 but above the session low of 7,302.96.
On Wall Street, around London’s close, the Dow Jones Industrials Average was down 34 points, or 0.1% at 35,720, while the broader S&P 500 index shed 0.4%, and the tech-laden Nasdaq Composite dropped 0.7%.
Joshua Mahony, senior market analyst at IG, a global leader in online trading commented: "Stocks throughout the US and Europe have struggled to maintain their upward trajectory today, as traders struggle with the dual effects of near-term economic restrictions and a likely ramp-up in monetary tightening in the coming months. Tech stocks are lagging as a result of growing expectations for a ramp-up in tapering before long, while closer to home the likely delay in BoE rate hikes will only push us back to the February meeting.
"Market sentiment is undoubtedly better than this same time last week, with much of the fear surrounding the Omicron variant eased as South African deaths remain largely unmoved. The actions taken by the UK government may be considered restrictive to some, but they are actually relatively light given the incredible transmission levels of this current variant. The decision to avoid hard-line actions akin to those seen last year are borne of the growing confidence that Omicron will be significantly less deadly than its predecessors.
"Thus while the UK economy may see consumer activity somewhat subdued compared with an ordinary December, investors should take solace in the possibility that we could soon see the economy firing on all cylinders once again."
3.45pm: UK market off worst levels but still down
Leading shares have come off their worst levels but are still in the red as investors take heed of the new UK omicron restrictions.
With businesses warning that the Plan B move could damage a fragile recovery at a key time of the year, the FTSE 100 has fallen 20.07 points or 0.27% to 7316.98.
Earlier it had gone as low as 7302.
Aero-engine maker Rolls-Royce Holdings PLC (LSE:RR.) remains the biggest faller in the leading index, down 4.23% as its latest update failed to dispel concerns about a renewed fall in air travel.
Heading lower for the same reason is British Airways owner International Consolidated Airlines Group (LSE:IAG), down 3.01%.
The mid-cap FTSE 250 has also fallen, down 0.34% at 23,152 as a number of leisure companies declined amid concerns about the new COVID-19 rules.
Wagamama owner Restaurant Group PLC (LSE:RTN) is down 5.17% while despite the imminent arrival of the new Spider-Man film, Cineworld Group PLC (LSE:CINE) has dropped 3.58%.
But Vent-Axia owner Volution Group PLC (LSE:FAN) is up 5.25% after an upbeat annual meeting statement. while retailer Frasers Group PLC (LSE:FRAS) - formerly Sports Direct - has risen 4.53% as half year profits jumped 75.3% to £186mln.
Despite cost rises, supply chain issues and worries about consumer spending, Frasers said it believed it could achieve an adjusted full year profit of between £300mln and £350mln.
2.57pm: US markets fall ahead of key inflation figures
Shares on Wall Street headed have headed south thanks to renewed jitters on the new coronavirus (COVID-19) variant and the affect it will have on global economies.
The Dow Jones Industrial Average shed around 145 points in New York to 35,608. The broader-based S&P 500 lost around 13 points at 4687.
The tech-laden Nasdaq Composite index lost around 49 points at 15,731.
"Investors are in a cautious mood once more, after stock markets bounced back strongly at the start of the week on reports that omicron symptoms are less severe than feared," said Oanda analyst Craig Erlam.
"There's still too much to learn about the variant to make firm conclusions but what we're seeing is already enough for governments to be imposing new restrictions."
Tomorrow sees the release of important US inflation news, namely, the consumer price index for November. Some economists believe the year on year growth rate could be as high as 7% - marking the biggest move since mid1982.
Back in the UK, and the FTSE 100 is down 24.88 points or 0.34% at 7312.17.
1.42pm: US jobless claims lowest since 1969.
US jobless claims have come in much lower than expected and at a new 52 year low.
The number of Americans applying for unemployment benefit for the first time fell to 184,000 last week, down from the previous week's level of 227,000, itself revised up by 5000.
This is the lowest figure since September 6 1969 and was below the forecast 220,000.
US Initial Jobless Claims Dec-4: 184K (exp 220K; R prev 227K)
- Continuing Claims Nov-27: 1992K (exp 1910K; R prev 1954K)
— LiveSquawk (@LiveSquawk) December 9, 2021
Initial UI claims (SA) fell to 184,000 last week, a fresh intra-crisis low, as the usual post-Thanksgiving jump in claims was smaller than expected.
Even with rising pandemic concerns, employers are hesitant to lay off the workers they have.#joblessclaims 1/ pic.twitter.com/EBQzBAPyFm
— Daniel Zhao (@DanielBZhao) December 9, 2021
12.54pm: Market hits low for the day
Leading shares have hit a low for the day as the detrimental effects of the new UK restrictions on business become increasingly apparent.
The FTSE 100 is down 27.30 points or 0.37% at 7309.75.
Aero-engine maker Rolls-Royce Holdings PLC (LSE:RR.) is the biggest faller, down 3% on concerns about the impact of the new rules and the spread of the omicron variant globally will have on air travel.
Similarly British Airways owner International Consolidated Airlines Group (LSE:IAG) has fallen 2.55%.
The weaker oil price has left BP PLC (LSE:BP.) 1.72% lower while Intermediate Capital Group (LSE:ICP) is down 1.78% as its shares went ex-dividend.
11.58am: US markets likely to end three days of gains
US stocks are expected to open lower, ending three days of gains for equities which were made on easing concerns over the severity of the new coronavirus (COVID-19) Omicron strain.
Investors are now cautiously eyeing US inflation data due for release on Friday to indicate the Federal Reserve’s next policy move.
Futures for the Dow Jones Industrial Average declined 0.35% in Thursday pre-market trading, while contracts for the broader S&P 500 index shed 0.36% and those for the tech-heavy Nasdaq 100 fell 0.45%.
Stocks headed into the green in Wednesday late afternoon trading after Pfizer said a third dose of its vaccine would be effective against the Omicron variant. The S&P 500 gained 0.3% to close at 4,701, while the Dow Jones edged 0.1% higher to 35,755 and the Nasdaq Composite closed at 15,787, a 0.6% increase.
“We had a sharp sell-off on omicron on Nov 26th, a couple of really volatile days and then a steady march back to where we were before – now markets are seeking fresh direction and the path of least resistance appears to be sideways for a bit until there is a bit more known about Omicron, inflation and the Fed,” commented Neil Wilson, chief market analyst for Markets.com.
Memestock GameStop Corp (NYSE:GME) shares are down 4.5% in premarket trading after it reported a bigger than expected third quarter loss of $1.39c a share.
Michael Hewson at CMC Markets UK said: "The company declined to provide an outlook, while also saying they had received a SEC subpoena on its share trading activity. The business is in the process of reorientating its business model towards online and away from bricks and mortar."
Back in the UK, the FTSE 100 is down 13.54 points or 0.18% at 7323.51.
11.10am: Plan B's big hit to the economy
It's no wonder that businesses are worried about the new restrictions.
The Centre for Economic and Business Research has been running the numbers, and reckons the working from home plan alone will cost £500mln a month in lost spending in just five UK cities (London, Manchester, Newcastle, Nottingham and Leeds).
Even without the new rules, travel and hospitality companies will be hit with a £1.3bn shortfall, it believes.
Just released. New @Cebr_uk calc of cost of 'Plan B' suggest hit of £500 million in monthly spending across five of England’s largest cities, while voluntary party cancellations and travel restrictions could cost further £1.3 billion across the country. https://t.co/4NfFY9nPxu
— Douglas McWilliams (@DMcWilliams_UK) December 9, 2021
It said: "Last night’s announcement by the Prime Minister that England would move into Plan B over the next week – mandating mask wearing in indoor settings, guidance to work from home (WFH), and vaccine passports for crowded and large venues – doesn’t come without economic costs.
"Most significantly among the new restrictions, a shift to homeworking next week will induce a step change in commuter and thus city-centre consumer behaviour. Cebr estimates that the WFH order will result in a £0.5 billion spending shortfall in just five cities alone over the next month.
"On the other hand, we judge that restrictions relating to mask-wearing and Covid certification measures are unlikely to imply significant economic costs on balance, as consumers and businesses have increasingly adapted to such measures throughout the pandemic. A short-term cost may however be felt by businesses as they implement such measures over the coming days.
"Meanwhile, independent of Plan B, increased nervousness over the new variant and stricter travel restrictions are expected to cause a loss of £0.9 billion in UK hospitality revenues this month, and £0.4 billion in inbound travel spending."
READ MORE: UK government's Covid ‘Plan B’ hits financial market's recovery
The FTSE 100 continues to flag on further consideration of the restrictions, and is now down 11.66 points at 7325.39.
Chris Beauchamp, chief market analyst at IG, said: "With little in the way of major news to drive price movement stocks have been reliant on the few earnings reports coming out, but also on watching Omicron-related developments.
"The UK’s move to new restrictions points towards the expected playbook for the weeks to come, and could well put some pressure on equity markets in what is normally a fairly positive time."
10.04am: Government's Plan B hits airlines, hotels, pubs and cinemas
Unsurprisingly given the new UK restrictions and the warnings about their impact, travel and hospitality shares are under pressure.
British Airways owner International Consolidated Airlines Group (LSE:IAG) is down 2.65% while Wizz Air Holdings (AIM:WIZZ) has lost 2.57%.
Hotels group Whitbread PLC (LSE:WTB) has fallen 1.22%, Restaurant Group PLC (LSE:RTN) is 3.85% lower, Cineworld Group PLC (LSE:CINE) is off 3.23% and JD Wetherspoon Plc (LSE:JDW) is down 2.13%.
Primark owner Associated British Foods PLC (LSE:ABF) has dipped 0.53% on concerns shoppers may now stay at home
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The page has been turned on the recovery story playing out on the financial markets this week, with the new chapter turning into a tale of woe for many ‘reopening’ stocks. News that fresh social restrictions are being imposed in the UK, amid worries that the new strain is more infectious have put a brake on the rebound of not just travel stocks but bricks and mortar retailers, and hospitality firms."
Oil is down on continuing concerns about omicron, despite a lower than expected fall in US inventories.
Brent has lost 0.44% to US$75.49 a barrel while West Texas Intermediate is 0.26% lower at US$72.17.
Naeem Aslam, chief market analyst at Avatrade, said: "Crude oil inventories fell by only 240,000 barrels. Meanwhile, oil output in the US jumped to 11.7 million barrels per day. The lower than expected decline in oil stockpiles and a rise in output by the US indicate that supply will likely surge in the short term and hence will help alleviate demand pressures to some extent."
So BP PLC (LSE:BP.) is down 1.38% and Royal Dutch Shell PLC (A shares) (LSE:RDSA) has lost 1.08%.
Overall the FTSE 100 is down 3.51 points at 7333.54.
9.27am: Market takes a turn for the worse
Well, the early rise was never very convincing and now leading shares have dipped into negative territory.
The FTSE 100 is down 1.98 points at 7335 as investors weigh up the effects of the latest UK restrictions.
Investors are also wary of Friday's US inflation figures, which could reinforce the idea of the Federal Reserve taking action to curb the growing pricing pressures in the economy.
Neil Wilson at markets.com said: "Tomorrow’s CPI inflation print for the US could upset the recent recovery – looks like 7% for annual inflation would not be far off the mark. This would cement the Fed’s hawkish pivot."
Before that come the weekly US jobless claims today.They hit their lowest levels since 1969 two weeks ago at 194,000 but rose to 222,000 the previous week. A figure of around 220,000 is expected for last week.
8.33am: Packaging group in favour
Demand for packaging as online shopping booms has helped DS Smith PLC (LSE:SMDS) report an upbeat set of results.
The company is the biggest riser in the leading index, up 2.71% as half year profits jumped 80% to £175mln.
Also heading higher is AstraZeneca PLC (LSE:AZN). Its shares have added 1.12% after news that its antibody combination Evusheld had received emergency use authorisation in the US for the pre-exposure prophylaxis (prevention) of COVID-19, with first doses expected to become available very soon.
8.21am: Market edges ahead but Rolls falls back
Leading shares have opened higher, as optimism about controlling the omicron variant outweighed the impact of the latest UK restrictions.
But it is not a very convincing rise, as hospitality companies in particular warned the government's Plan B would hit the industry hard.
A flavour: Emma McClarkin, chief executive of the British Beer & Pub Association, said: “Make no mistake, this is a huge blow for our sector as it further undermines consumer confidence and is devastating for pubs based near offices and in town centres."
So the FTSE 100 is up just 10.71 points or 0.15% at 7347.76.
Shares in aero-engine maker Rolls-Royce Holdings PLC (LSE:RR.) have fallen 2.58% on continuing concerns about the effect of the new variant on air travel.
The company said in a trading update that its performance and order uptake had improved, and its restructuring programme was generating cost savings more quickly than expected.
But while its defence division was in line with expectations, the civil side saw activity levels below previous guidance.
Richard Hunter, head of markets at interactive investor, said: "The Civil Aerospace division remains the area of concern. The unit accounts for 41% of revenues and, has been widely reported, derives much of its income from hours flown on the engines it has provided. The company is putting on a brave face at the current time, pointing to a gradual recovery in international flying, but the latest impact in the form of the omicron variant resulting in further travel restrictions has come at a difficult time for the company..
"There are signs of progress within its restructuring programme and the company should emerge as a leaner entity as and when some of the dust eventually settles. At the same time, the strength of the Defence unit in particular is of solace, and a gradual recovery in flying hours would improve the cause over the medium term. In the meantime, however, the stock remains one only for the most steely and patient of investors, with the market consensus of the shares as a hold also implying that the company still has some way to go before a recovery can be called.”
6.58am: Market set for modest gain
The FTSE 100 is expected to open modestly higher after a strong finish on Wall Street in the wake of news that a third dose of the Pfizer/BioNTech vaccine would give decent protection against the omicron variant.
The blue chip index closed marginally lower on Wednesday as the government announced further restrictions under its so-called Plan B (whether as a distraction from the Downing Street parties row or not). These include working from home and vaccine passports for large events.
Spread betting firm IG Index is calling the FTSE 100 just six points higher at 7343.
On Wall Street the Dow Jones Industrial Average ended 0.10% or 35 points higher at 35,754.75, the S&P 500 rose 0.31% to 4701.21 and the Nasdaq Composite jumped 0.64% to 15,786.99.
Michael Hewson, chief market analyst at CMC Markets UK, said: "After two days of strong gains, yesterday’s European session was more of a consolidation session, with some modest profit taking, after the UK became the latest country to impose slightly stronger Covid restrictions on its population.
"Having recovered most of the losses seen in the post-Thanksgiving sell-off, investors are now caught between hope that vaccines will be able to afford enough protection against the new variant, against concerns that even a significant acceleration in infection rates might overwhelm health systems."
The spectre of inflation also looms large, with the latest evidence of pricing pressures coming from China.
China's consumer price index rose from 1.5% to 2.3% while the producer price index only slowed modestly from 13.5% to 12.9%.
Hewson said: "This doesn’t bode well for the next few months given how PPI tends to front run the CPI numbers, not only in China, but all around the world. More worryingly, food prices also came in higher with vegetable prices rises rising 30.6%, a trend that appears to be being repeated globally."
6.50am: Early Markets - Asia / Australia
Asia-Pacific shares were mixed on Thursday after the World Health Organization (WHO) said on Wednesday that the omicron variant could change the course of the pandemic.
A statement from a WHO official noted that more research was needed into studying the variant to appropriately take on board exactly how threatening it is poised to be.
China’s Shanghai Composite surged 0.97% and Hong Kong’s Hang Seng index jumped 0.99%,
The Nikkei in Japan slipped 0.47% while South Korea’s Kospi gained 0.93%.
Australia’s S&P/ASX200 closed 0.28% lower at 7384.5 points with energy, mining and tech stocks leading the fall.