- FTSE 100 closes 71 points lower
- Main US indices drop by around 2%
- Travel, oil stocks bear brunt of selling pressure
4.50pm: No Santa rally allowed
The FTSE 100 index ended sharply lower on the last Monday before Christmas as US stocks also dropped amid concerns about the impact of the Omicron coronavirus (COVID-19) variant and the likelihood of more unseasonal restrictions on countries around the globe.
At the close, the UK blue-chip index was down 71.89 points, or 1.0% at 7,198.03, off the session low of 7,101.04 but well below the day's opening peak of 7,269.92.
On Wall Street, around London’s close, the Dow Jones Industrials Average had plunged by 699 points, or 2% at 34,665, while the broader S&P 500 index dropped 1.9%, and the tech-laden Nasdaq Composite shed 2.0%.
Danni Hewson, AJ Bell financial analyst, commented: “It looks like the only thing Santa’s bringing investors this Christmas week is a whole lot of uncertainty. Markets have succumbed to this particular variant of Covid malaise tumbling across the board as country after country implements greater lockdown measures and people in the UK prepare to have their festivities curtailed."
“This year’s tale of Christmas markets is too much like a bad sequel and it seems Wall Street’s also got the memo. Stocks in the US have been dealing with a double whammy of Covid woes and concern that the one thing investors could rely on to make them money next year might be looking a little shaky.
"Travel stocks and big oil have slumped. If people aren’t flying, driving or manufacturing oil demand will slump and OPEC+ will be forced to tighten the taps once again. The oil price has bounced back a little, but there is a worry that any meaningful slowdown in production could put the global economy right back where it was a few months ago, desperate for supply and struggling to cope with rising prices'" Hewson added.
3.50pm: Christmas, what Christmas!
FTSE 100 was heading for a heavy fall as another attempt to rally petered out towards the close of trading.
A poor start by US markets added to the unease, which was all sparked by worries over the Omcron variant and its spread in the UK and also in Europe where the Netherlands and Germany became the latest countries to tighten restrictions.
US tech proxy Scottish Mortgage Trust was a heavy faller dropping 1.9% to 1,332.5p as Nasdaq was hit hard as the jitters spread to the US.
Craig Erlan, at Oanda, also suggested it might also be traders starting the holiday early that is also unsettling the market.
"The festive season is upon us; perhaps traders are turning the laptops off, traveling, spending time with family, and binging on treats and the usual array of Christmas films.
"The Santa rally may elude us this year after an impressive pre-Christmas rebound following the initial omicron shock. Given the amount of downside risks going into the new year, it's hardly surprising to see investors adopting a more cautious approach as they log off for the holidays."
Hospitality again was under the cosh with trade groups calling for financial help from the government saying Omicron has already led to plummeting sales and “decimated” bookings.
Speaking to the BBC Greene King (LSE:GNK) chief executive Nick Mackenzie says the spread of Omicron has already ruined what was supposed to be the busiest weekend of the year for pubs and restaurants.
“Demand has dropped, bookings have been decimated, some parts of the country we are 70%, 80% down on 2019, so the situation is pretty unsustainable.”
Mitchells & Butlers (LSE:MAB) dropped 1.3%, JD Wetherspoon 1.2% and Compass by 1.5%.
FTSE 100 was down by 74 or 1% at 7,196 heading towards the close.
15;03 FTSE 100 turns south again as US markets struggle
US markets opened lower as tech stocks, oil and travel stocks all came under pressure on fears about the spread of Omicron.
Nasdaq dropped 184 points or 1.2%, while the S&P 500 dipped 1.3% and Dow Jones 1.5%.
FTSE 100 turned down again in sympathy with US markets, dropping 91 to 7,178.
14:11 FTSE 100 going nowhere as US tipped to tank
Omicron might have dampened the end of the year but for some sectors 2021 has been memorable for the right reasons.
Britain’s tech businesses have seen record investment over the past twelve months, with £29.4bn raised by start-ups and scale-ups according to the Digital Economy Council.
That was more than twice the sum raised last year and reflects the acceleration of the UK’s digitisation said the council.
The number of British unicorns, private businesses worth more than US$1bn, has also soared with the new investment.
Second car vendor Motorway and Starlng Bank are two of the most notable.
Investment has also been booming around the world with global merger and acquisition (M&A) activity breaking all records in 2021, according to Dealogic.
Deals topped US$5trn for the first time this year, with the actual total US$5.6trn smashing the previous best of US$4.4trn seen in 2007.
"Corporate balance sheets are incredibly healthy, sitting on $2 trillion of cash in the US alone -- and access to capital remains widely available at historically low costs," said Chris Roop at JPMorgan told Reuters.
FTSE 100 down 74 at 7,196
13:20: US techs tipped for tough start, The Hut perks up as shorters move sights elsewhere
A predicted tech rout when Wall St opens has knocked any FTSE 100 rally firmly on the head with the index now down 81 at 7,189.
THG, better known as The Hut, was among the best of the gainers among the rest as one of its most vehement critics decided the shares had fallen far enough.
Shares in the online retail platform jumped by almost 11% to 210p as city research from The Analyst removed its short advice.
Having chipped into the wave of adverse criticism that flowed towards the company following an investor meeting in October, The Analyst now thinks enough is enough and after a 70% drop the shares have sunk too far.
In response to critics, founder Matt Moulding has given up his golden share and split his role of chairman and chief executive to give more transparency to the group
12:15pm: FTSE 100 recoups some ground, US markets to open lower
US stocks look set to drop at the start of the final fore-shortened trading week before Christmas as investors worry that a rise in Omicron variant coronavirus (COVID-19) cases will weigh on economic recovery after last week's moves by central banks to dial-down stimulus.
Futures for the Dow Jones Industrial Average shed 1.3%, while those for the S&P 500 fell 1.3%, and contracts for the tech-focused Nasdaq-100 dropped 1.5%.
Stock futures pared some earlier losses after drugs firm Moderna said a third dose of its COVID-19 vaccine increased immune responses against Omicron compared with two doses in lab tests, signaling the shot could still offer protection. Moderna shares jumped more than 5% pre-market.
Some countries are imposing restrictions to stem the spread of the Omicron variant as the holiday season starts. The Netherlands on Sunday reimposed a lockdown, with all nonessential shops, bars and restaurants closed until mid-January.
President Joe Biden plans to deliver an update Tuesday on the fight against COVID-19 in the US, where cases are rising.
Also weighing on sentiment, was news that Democrat senator Joe Manchin has said he would oppose his party’s roughly $2 trillion education, healthcare and climate package.
Oil prices fell amid concerns that the spread of the Omicron variant could hurt global economic growth and impact demand.
After getting hammered when the pandemic began, global oil demand has recovered this year but still remains about two million barrels a day short of its pre-pandemic level of almost 101 million barrels a day, according to the International Energy Agency.
FTSE 100 down 70 at 7,199
11:12 FTSE 100 tries to recover
FTSE 100 is trying to recover after the brutal start, but the improvement is slow and steady and lacking conviction if truth be told.
There are some risers. Rentokil Initial is top of the Footsie pile as it regroups after its bashing when it announced it was buying US rival Terminix. Shares rose 15p or 2.8% to 550p.
Royal Mail should also be a beneficiary if there are any further lockdowns introduced, though if the government announces the details by post it might be weeks before anyone knows given the current lack of letter deliveries. Shares in the postal group are up by 1% to 501.4p.
Sage Group is another riser as the accountancy software firm completed the acquisition of the 83% interest it did not already own in Brightpearl for US$299mln (£225mln) in a deal that expands its reach in retail and e-commerce. Shares added 5p to 818.4p.
On the downside, potential Omicron losers feature heavily.
Events group Informa is the worst hit, shedding 4.8% to 478p, British Airways owner IAG is down 3.3% at 1127.7p and Flutter Entertainment off 3.6% at 10,790p.
Footsie down 81 at 7,188.
10.29: Hospitality facing Christmas crisis
FTSE100 was stuck deep in the red as investors baulked at the prospect of more Covid-19 restrictions being introduced possibly as soon as this week.
A report in the Telegraph said Boris Johnson is considering three options given to him by scientists to tackle the surge in Omicron infections, one of which might be to curb household mixing, reintroduce social distancing and introduce an 8pm curfew on pubs.
Hospitality trade groups meanwhile have warned that they facing a new wave of closures due to the slump in trade already caused by the Omicron outbreak.
Up to 10,000 outlets will shut without further support measures Kate Nicholls, the head of HospitalityUK, said with the help needed to be given within 24 hours to save many businesses that are hanging on "by their fingernails".
FTSE 100 was down 93 at 7,177, though this was a recovery from earlier in the day when it shed more than 160 points.
6.26: Omicron spectre haunts FTSE 100
The spread of the Omicron Covid variant and its potential impact on the world economy looks set to prompt a triple-digit fall in the FTSE 100.
A lockdown in the Netherlands looks set to be followed by further restrictions across Europe to ease a winter surge in cases.
“With record Covid cases in the UK in the past few days, and new restrictions being implemented across Europe, it almost feels like an action replay of 12 months ago, with some scientists in the UK calling for a fresh lockdown before Christmas, in a move that is likely to be as welcome as toothache,” said Michael Hewson, an analyst at CMC Markets.
“In the Netherlands, the government there has announced a fresh lockdown, while in the rest of Europe governments there are holding emergency meetings on new restrictions, with France and Germany imposing bans on arrivals from the UK nationals.
“In Ireland, the government there has said that all bars, restaurants, and cinemas must close by 8 pm.”
Back here in the UK, the ruling Tory party appears characteristically unsure about the next set of restrictions, while pressure continues to pile up on accident-prone Boris Johnson.
The weekend press appears to suggest that the Prime Minister is on his last strike after a series of mishaps, including ‘partygate’ and the resignation of his Brexit supremo Lord Frost over the weekend.
Foreign secretary Liz Truss, a favourite with the grass-roots Conservative Party, and Chancellor, Rishi Sunak, are openly being touted as potential Johnson replacements.
Looking ahead there is a dearth of company news in the final week before Christmas with the latest GDP reading the pick of the economic news.
Around the markets
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- Oil US$68.23 (-3.71%)
6.50am: Early Markets - Asia / Australia
Asia-Pacific shares fell on Monday as China trimmed its one-year loan prime rate from 3.85% to 3.8% — the first cut in the benchmark lending rate since April 2020.
The Nikkei in Japan slumped 2.13% while South Korea’s Kospi declined 1.81.%.
China’s Shanghai Composite slipped 1.04% and Hong Kong’s Hang Seng index fell 2%.
Australia’s S&P/ASX200 closed 0.16% lower at 7292.2 points, hit by a 3.4% fall in the energy sector.