- FTSE 100 ends 44 points higher
- US stocks push ahead
- GDP readings mixed in UK and US
4.50pm: Christmas just around the corner
The FTSE 100 index finished higher on Wednesday as a late Santa Rally looked finally to have taken hold and pushed aside fears over the impact of the Omicron coronavirus variant - for now.
At the close, the UK blue-chip index was ahead 44.25 points, or 0.6% at 7,341.66, the day's peak and well above the early session low of 7,273.45.
On Wall Street, around London’s close, the Dow Jones Industrials Average was up 175 points, or 0.5% at 35,668, while the broader S&P 500 index added 0.7%, and the tech-laden Nasdaq Composite gained 0.9%.
Joshua Mahony, senior market analyst at IG, a global leader in online trading commented: "US and European markets have remained on the front-foot, with equities heading into the final week of 2021 on a cautiously optimistic tone. Risks remain evident across many stocks, from the lockdown impact on reopening stocks, to the concerns that growth stocks will falter as rates and yields head higher."
He added: "The latest concerns over Joe Biden’s ability to pass his $2 trillion ‘build back better’ spending plan appear to have had little material impact in the grand scheme of things, with the package amounting to just 0.8% of annual GDP if passed in its previous form. Nonetheless, Manchin’s fear that another spending package could drive up inflation does highlight the fact that rising prices provide a roadblock to additional stimulus on both a monetary and fiscal-front.
"Biden will hope that a slimmed-down package could be agreed in the coming days, which could bring a short-term boost for sentiment. However, for now we remain caught within a period of uncertainty as markets attempt to gauge exactly how disruptive this Omicron wave is going to be for businesses."
"The upgraded third-quarter GDP reading out of the US helped highlight how the economy continued to strengthen over the course of September, putting the 2021 figure on track for the best rate of growth since 1984. Nonetheless, we are widely expecting to see economic activity drop-off in the coming weeks, with Christmas sales taking a hit as cases and hospitalisations rise," Mahony concluded.
4.05pm: US consumers more confident
US consumer confidence has come in stronger than expected despite concerns about the omicron variant and rising prices.
The consumer confidence index from the Conference Board rose from 111.9 in November to 115.8, compared to forecasts of a dip to 111.
Lynn Franco, senior director of Economic Indicators at The Conference Board, said: "Consumer confidence improved further in December, following a very modest gain in November.
“The Present Situation Index dipped slightly but remains very high, suggesting the economy has maintained its momentum in the final month of 2021. Expectations about short-term growth prospects improved, setting the stage for continued growth in early 2022. The proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations over the next six months all increased.
“Meanwhile, concerns about inflation declined after hitting a 13-year high last month as did concerns about COVID-19, despite reports of continued price increases and the emergence of the omicron variant. Looking ahead to 2022, both confidence and consumer spending will continue to face headwinds from rising prices and an expected winter surge of the pandemic.”
3.45pm: Market hits high for the day
Leading shares have been drifting around since the start of trading, but they have now drifted to a high for the day.
With little in the way of volume as we head closer to Christmas, the traders who are around are having to assess the worse than expected UK growth figures, not to mention the latest updates on the omicron variant.
There was some relief that there will be no further restrictions immediately, but there is still a complete lack of clarity about what happens after the festive season.
But cautious positivity seems to be the current mood..
The FTSE 100 is up 14.61 points or 0.2% at 7312.02 having been as low as 7273.
The risers are a mixed bag, with Dechra Pharmaceuticals PLC (LSE:DPH) leading the way, up 3.66%.
Aero engine maker Rolls-Royce Holdings PLC (LSE:RR.) has risen 2.78%, and CMC Markets' Michael Hewson said: "Rolls-Royce is also trading higher as it continues to reap the benefits of this week's £85m deal with Qatar to build new low carbon nuclear power units.
"It was also announced this morning that the company’s Power Systems unit is developing MTU engines that would be able to use eco-friendly methanol fuel for shipping, as the embattled UK company looks to diversify further away from its core business which is still civil aviation."
Taylor Wimpey PLC (LSE:TW.) has built up a 2.18% gain after the housebuilder agreed to strike out terms that meant ground rents doubled every 10 years, following a settlement with the UK Competition and Markets Authority. The cost of this would fall within the existing provisions set aside for the current year.
Miners are lower on renewed worries about demand for commodities, with Fresnillo PLC (LSE:FRES) falling 1.95%, Rio Tinto PLC (LSE:RIO) down 1.43% and BHP Group PLC (LSE:BHP) 1.41% lower.
3.08pm: US investors assess GDP data
US stocks have made a positive start in the wake of the better than expected US growth figures.
The Dow Jones Industrial Average is up 37 points or 0.11% while the more broadly based S&P 500 has added 0.15%.
The tech heavy Nasdaq Composite has climbed 0.17%.
Back in the UK, the FTSE 100 remains in the green, up 7.65 points or 0.1% at 7305.06.
Michael Hewson, chief market analyst at CMC Markets UK, said: "As we head towards the Christmas break, amidst all the concerns around omicron, the FTSE100 has managed to hold up well, although it is little changed from where it was just before US Thanksgiving when it closed at 7,301.
"Some preliminary results from the UK Health and Security agency around the effects of the omicron variant appear to be being received positively today. In line with South Africa’s experience, it would appear that the omicron variant does indeed appear to be milder, although the report also suggests that the higher infection rate could also place increased strain on hospitals, if enough people get it even if mortality is lower.
"Nonetheless, it is still good news, and helps justify the move to delay a decision on new restrictions in England until after Christmas, and potentially allow greater leeway next week when restrictions could well change again."
1.55pm: US GDP grows slightly more than first estimates
Unlike the UK, the US economy grew a little faster than first expected in the third quarter.
The country's GDP rose by an annualised 2.3%, up from an initial reading of 2.1%.
But that is well down on the 6.7% annualised growth seen in the second quarter.
The Bureau of Economic Analysis said the third quarter figure "reflected the continued economic impact of the COVID-19 pandemic."
It added: "A resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country. Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased."
US BEA: 3d revision of 3Q US GDP categorical contributions: #GDP #economy pic.twitter.com/7I0I2XiDLT
— Mace News (@MaceNewsMacro) December 22, 2021
12.21pm: Smith & Nephew leads the FTSE 100 risers
Leading shares continue to head in the right direction.
The FTSE 100 is now up 8.19 points at 7305.60.
The risers are a mixed bunch, including medical group Smith & Nephew PLC (LSE:SN), up 2.36%, gaming group Entain PLC (LSE:ENT) which has climbed 2.1*% and British Airways owner International Consolidated Airlines Group (LSE:IAG), 2.16% better.
11.52am: Omicron concerns look like troubling US markets again
US stocks look set to ease back at the open, reversing some of the previous session's gains which saw it snap a three-day losing streak as hopes for a Santa rally are balanced by fears over the omicron variant.
Futures for the Dow Jones Industrial Average were 0.1% lower, those for the S&P 500 index ticked down 0.2%, and contracts for the Nasdaq-100 shed 0.3%.
Stocks have been see-sawing in the run-up to Christmas as investors seek to determine how severe the economic impact of the rapid spread of the Omicron variant will be.
Investors are also preparing for the Federal Reserve to raise interest rates in 2022 and squaring positions before the year-end.
On the data front, The Conference Board’s latest consumer confidence index is forecast to tick higher, after inflation and the pandemic knocked sentiment in November.
Back in the UK, the FTSE 100 has inched back into positive territory. It is currently up 3.27 points and back above the 7300 level at 7300.68.
10.57am: Oil edges higher
Oil has edged higher and continued its recent revival, as the UK and US governments both seemed to rule out any further restrictions to deal with the omicron spread, at least for the moment.
Brent crude is up 0.28% at US$7.19 a barrel while West Texas Intermediate is 0.39% better at US$71.40.
Meanwhile the FTSE 100, having edged marginally and briefly into positive territory, has edged back down again.
It is now down 3.64 points or 0.05% at 7293.77 as UK third quarter growth disappointed investors.
But it is off the low of 7273 reached earlier.
9.45am: Investors hope omicron effect will be transitory
The market certainly has a holiday feel about it at the moment, with investors content to leave the recent volatility behind them and stick with what they've got.
So despite the disappointing UK growth figures, the FTSE 100 is down just 10.24 points or 0.14% at 7287.17.
AJ Bell investment director Russ Mould said: "The FTSE 100 took a modest step back on Wednesday as UK third quarter growth figures came in short of expectations, dragged lower by weak exports.
“Investors are preparing to go into hibernation for Christmas and will hope by this time next week we’ll know a lot more about the trajectory of omicron and the likelihood of further restrictions to contain it, and just how long those curbs will be in place.
“For now the markets, bar the odd day, have just about managed to hold on to the idea that, to employ central bankers’ favourite word of 2021, omicron’s impact will be transitory.
“If that changes, we could see a more pronounced sell-off in global stocks as growth expectations for 2022 are rapidly reset.
“The disappointing figures on the UK economy were before the omicron wave hit, so there will be some concern that they represent the calm before the storm and the situation will be revealed to be significantly worse when the fourth quarter numbers are printed."
9.12am: Calmer day for markets so far
After Monday's losses and yesterday's rebound, things look a little calmer for the market at the moment.
As we head into the Christmas break, volumes are thinner and while this could lead to volatility, this does not seem to be happening today so far.
The FTSE 100 is down 16.54 points or 0.23% at 7280.87 while the mid-cap FTSE 250 has edged up 0.23% to 22,872.
In the leading index, miners are among the fallers after a recent rebound, with Rio Tinto PLC (LSE:RIO) down 1.5% and BHP Group PLC (LSE:BHP) 0.87% lower.
Medical companies are heading in the other direction, with Dechra Pharmaceuticals PLC (LSE:DPH) up 1.65% and Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF) 0.91% higher.
Elsewhere Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) has added 3.78% after the company announced a partnership with convenience store One Stop, a subsidiary of Tesco.
From this week 40 One Stop shops will offer delivery of up to 500 grocery items through Just Eat.
The move comes just a few days after Just Eat launched a link-up with Asda.
Victoria Scholar, head of investment at interactive investor, said: "Food delivery businesses such as Deliveroo and Just Eat Takeaway.com are all fighting for a slice of the increasingly competitive UK grocery market and the race is getting even tougher with the emergence of direct-to-consumer grocery delivery services such as Getir, which cut out the supermarkets altogether.”
8.57am: FTSE 100's crackers and turkeys
As it's the festive season, it's also time to start looking back over the year.
And Hargreaves Lansdown has listed its Christmas crackers and turkeys - the best and worst performers in the FTSE 100.
Susannah Streeter, senior investment and markets analyst, said: ‘’There has been a cracker of a performance this year from companies which have shared on the spoils of reopening after the pandemic.
"As demand bounced back for commodities and industrial components, chemicals and services, companies like Ashtead, Glencore and Meggitt and Croda International have been pushed to the top of the FTSE 100 leader board this year
"Royal Mail has delivered a box of delights in 2021 as it capitalised on the shift to e-commerce by ramping up parcels deliveries and modernising its infrastructure.
"But investors would have found the performance of some of the pandemic winners hard to swallow this year as some have turned into turkeys in 2021. E-grocer Ocado has delivered a disappointing performance, following a string of setbacks. Bets made on Flutter Entertainment would also have disappointed given its share slide and high hopes of a great travel rebound also evaporated, which has led to British Airways owner, IAG putting in a dismal showing in the share rankings for 2021."
Among the winners Ashtead Group Plc (LSE:AHT) has added 72%, Glencore PLC (LSE:GLEN) has climbed 56%, Meggitt PLC (LSE:MGGT) is up 57%, Croda International PLC (LSE:CRDA) has climbed 52% and Royal Mail PLC (LSE:RMG) has risen 55%
But Ocado Group PLC (LSE:OCDO) has lost 26%, Flutter Entertainment PLC (LSE:FLTR) has fallen 27% and International Consolidated Airlines Group (LSE:IAG) is down 18%.
8.15am: Leading shares open lower
The disappointing UK growth figures seem to have put a spanner in the works as far as the market is concerned.
Defying expectations that Tuesday's rally would continue, the FTSE 100 has dipped 12.18 points or 0.17% to 7285.23 in early trading.
But the fall is fairly marginal - so far. And analysts believe investors generally are becoming a little less concerned about the fallout from the latest COVID-19 variant and its impact on the global economy.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "Despite the new restriction measures, many investors believe that omicron would only have a temporary impact on the economic activity and should not be a problem for the overall positive trend in equities...
"Plus, the US Food and Drug Administration will likely authorize a COVID-19 pill from Pfizer and Merck..and that could be another brake to the pandemic...
"Of course, the thinning holiday volumes and the rising volatility is partly responsible for the strong jump in equity prices, as the moves are exacerbated by low liquidities. But the same would be true for the downside corrections. In this context, any price pullback would also be bigger than the normal times."
7.38am:GDP hit by subpar export performance
More on the worse than expected UK GDP figures:
UK Q3 accounts data - disappointing details. GDP growth revised down to 1.1% from 1.3%
???? Hefty drag from trade thanks to UK's subpar export performance and foreign earnings from UK investments
???? Biz investment fell sharply, not good given importance to recovery longer-term
— Andy Bruce (@BruceReuters) December 22, 2021
7.32am: UK growth disappoints
The UK economy grew by less than expected in the third quarter, even before the effects of the spread of the omicron variant are taken into account.
Third quarter GDP rose by 1.1%, down from the initial estimate of 1.3% which was itself lower than the 1.5% forecast.
The Office for National Statistics said: "In output terms, the largest contributors to the increase in Quarter 3 2021 were hospitality, and arts, entertainment and recreation following the further easing of restrictions and reopening of the economy during this period; production and construction both fell."
GDP growth has been revised from 1.3% to 1.1% in Q3 2021.
However, upward revisions to 2020 means GDP in Q3 is 1.5% below its pre pandemic level https://t.co/dkYPLQ7WzC pic.twitter.com/kDRsxJkENx
— Office for National Statistics (ONS) (@ONS) December 22, 2021
The level of GDP is now 1.5% below where it was pre-coronavirus (COVID-19) in the first quarter of 2019, revised from the previous estimate of 2.1% below, because of upward revisions to growth in 2020.
Annual UK GDP in 2020 is now estimated to have fallen by 9.4%, revised from a first quarterly estimate of negative 9.7%.
ONS Director of Economic Statistics Darren Morgan said: "Our revised figures show UK GDP recovered a little slower in the third quarter, with much weaker performances from health and hairdressers across the quarter, and the energy sector contracting more in September, than we previously estimated.
"However, stronger data for 2020 means the economy was closer to pre-pandemic levels in the third quarter."
And on hairdressers, they feel they have been left out of the government's support packages.
Amy Baker, owner of Wisbech-based Halo Beauty and Holistic Therapy, said: "Perhaps this will be a wake-up call for the Government about the health and beauty sector, which has been hammered just as hard as hospitality but which has been all but forgotten... Rental on our properties alone is crippling many business owners in the beauty sector because there’s been no form of regulation on business rental rates. If anyone needs a serious makeover, this government does."
6.50am: Markets set to edge higher
The FTSE 100 is seen on the front foot ahead of Wednesday’s open, continuing yesterday’s up-day.
CFD and spreadbetting firm IG Markets makes London’s blue-chip benchmark up 16 points, pitching a price at 7,305 to 7,308 with just over an hour to go until the open.
In London, one wouldn’t yet call it a Santa rally - a little Rudolph rebound maybe – nevertheless as the week counts down to Christmas and volumes begin to tail off the market is holding up.
Some somewhat nominal economic markers are in focus.
Michael Hewson at CMC Markets UK said: “Today’s European market open looks set to build on the rebound seen yesterday, with the main focus today on the final iterations of UK and US Q3 GDP, along with US Consumer Confidence for December.
“Since the previous iteration of UK Q3 GDP, the pound has come under pressure, largely due to concerns over how the current raft of restrictions will impact on the Q4 GDP numbers, when they get released at the end of January next year. Nonetheless we still saw a significant slowdown in Q3, from the better than expected 5.5% rebound seen in Q2.
“This shouldn’t have been too much of a surprise given the delay to reopening the economy, however it was still disappointing when the numbers came in below expectations of 1.5%, falling back to 1.3%.”
Wall Street enjoy a stronger Tuesday with the Dow Jones rising 560 points or 1.6% to finish the day at 35,492.
The S&P 500 was similarly strong, rising 1.78% to 4,649 whilst the Nasdaq went higher, adding 2.4% to 15,341. Small-cap focussed Russell 2,000 saw nearly 3% added, to close Tuesday at 2,202.
Around the markets
The pound: US$1.3250, down 0.09%
Gold: US$1,787 per ounce, down 0.14%
Silver: US$22.50 per ounce, unchanged
Brent crude: US$73.95 per barrel, up 3.4%
WTI crude: US$71.26 per barrel, up 3.8%
Bitcoin: US$49,216, up 2.33%
Ethereum: US$4,046, up 2.9%
6.50am: Early Markets - Asia / Australia
Stocks in the Asia-Pacific region gained on Wednesday even as a jump in COVID-19 cases globally, just days before Christmas, led to mobility restrictions in some countries.
The Nikkei in Japan rose 0.16% and South Korea’s Kospi lifted 0.27%.
China’s Shanghai Composite was unchanged while Hong Kong’s Hang Seng index gained 0.33%.
Australia’s S&P/ASX200 closed 0.13% higher at 7364.8 points as the country reported more than 5,000 daily COVID-19 infections for the first time during the pandemic.
Prime Minister Scott Morrison revealed a suite of new measures to ensure Australia is not plunged back into lockdowns following an emergency national cabinet meeting on Wednesday.