It’s been a subdued day for European markets, with the FTSE100 spending most of the day drifting in and around the flat line, as markets absorb fresh news flow around the Omicron strain.
Europe
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.
We’ve seen further modest gains in the travel and leisure sector, with IAG edging higher, while Wizz Air is also higher after announcing it has acquired 15 additional slots at Gatwick Airport from Norwegian Air Shuttle, meaning that Wizz will now be able to operate an extra 4 aircraft out of the airport.
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.
Croda International shares are modestly lower after the company announced it was selling its Performance Technologies business for €915m to Cargill Velocity Holdings.
Taylor Wimpey shares are higher after announcing it had reached agreement with the CMA to enable all leaseholders who were on ten-year doubling ground rent leases to revert to a fixed ground rent scheme. This would be done within the existing provisions set aside by the company for its current fiscal year.
US
US markets opened flat, despite yesterday’s welcome rebound from three days of declines. This afternoon’s latest US Q3 GDP numbers came in slightly better than expected, coming in at 2.3%, a modest upgrade from 2.1%, with personal consumption providing all of the uplift, rising from 1.7% to 2%.
On the company's front Blackberry shares have slipped modestly after the company disappointed on its Q4 guidance. Q3 numbers were positive with the company returning a profit of $74m on revenues of $184m.
Pfizer shares have continued to edge higher after the company agreed a deal to sell 2 5m doses of its new Covid pill to the UK.
Tesla shares also moved higher after CEO Elon Musk said he’d sold enough stock to meet his obligations around his expiring stock options.
FX
The US dollar has been a little bit softer today, with the pound edging back above 1.3300 after the final reading of UK Q3 GDP came in rather mixed.
The quarterly number was revised down from 1.3% to 1.1%%, which was disappointing, however on an annualised basis the number was revised higher to 6.8% from 6.6%. This upgrade means that the UK economy is closer to pre-pandemic levels than originally thought, despite the slowdown seen in the quarterly number. That being said its still pretty much rear-view mirror stuff with the immediate focus on how much damage the events of the last three weeks have done with respect to Omicron.
Commodities
Crude oil prices are treading water near to their recent highs, on optimism that we might see better outcomes as a result of Omicron being a milder variant. The reluctance of governments to impose full blown new lockdowns is also helping on the margins.
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