FTSE 100 Live Monday
FTSE 100 leads Europe relief rally
17:52 , Simon Freeman
Concerns that the Omicron variant of Covid-19 could lead to further global shutdowns and restrictions appeared to ease among traders this evening.
Reports suggesting the new strain may only lead to mild symptoms and lessen the impact on the economy sent shares in travel firms and airlines soaring after a week of selloffs.
As a result, the FTSE 100 closed the day up 109.96 points, or 1.54%, at 7232.28.
In Europe, there was equally high levels of optimism with the German Dax closing up 1.39% and the French Cac up 1.48%.
Michael Hewson, chief market analyst at CMC Markets UK, said: “The biggest beneficiaries are in travel and leisure with British Airways owner IAG shrugging off the tighter rules around testing and quarantine, on reports that the EU could consider easing Omicron travel restrictions to South Africa in the next week or so.”
IAG topped the biggest risers list, with shares soaring 8.1%, up 10.64p at 132.34p. There was also growth for aircraft engine maker Rolls-Royce up 4.8p at 129.7p; Intercontinental Hotels up 157p at 4,701p; Premier Inn owner Whitbread up 93p at 2,976p and EasyJet up 27.8p at 556p.
Elsewhere, leisure firms also enjoyed a boost as bosses hoped the Omicron fears might be allayed and bring customers back to pubs and bars in the all-important Christmas party season.
Wetherspoons, Mitchells & Butler and the Restaurant Group all enjoyed rising shares – up 6.1%, 6.6% and 8.4% respectively.
The biggest risers on the FTSE 100 were IAG, up 10.64p at 142.34p; Flutter Entertainment, up 595p at 10,625p; Melrose, up 6.4p at 150.6p; Rolls-Royce, up 4.8p at 129.7; and Burberry, up 66.5p at 1,832.
The biggest fallers on the FTSE 100 were Ocado, down 44.5p at 1,582p; Darktrace, down 10.6p at 416.2p; Polymetal, down 22.5p at 1,332.5p; Persimmon, down 35p at 2,771p; and Scottish Mortgage Investment Trust, down 11.5p at 1,385p.
Danni Hewson at AJ Bell said: “Both US and UK markets have shared in the good tidings delivered by US medical advisor Anthony Fauci that Omicron looks less severe that had been feared.
“The S&P 500 top movers looks like a travel expo filled with cruise operators and airlines, resorts and booking operators. New travel restrictions might have come in for now, but clearly the sector is letting out the biggest sigh of relief right now, relief shared by travel and leisure businesses in the UK.”
Metro Bank dips below 100p as Apollo walks
16:39 , Simon Freeman
Shares in Metro Bank slid further this afternoon following a report that Apollo is ditching its takeover pursuit.
The troubled lender - whose value has crashed 30% this year - declined another 4p to 97p a share.
It followed an unconfirmed report published by Bloomberg stating the New York-based private equity group has decided not to progress with a rumoured buy-out.
It would be the second lender to abandon a potential deal in weeks. Last month Carlyle ended talks about a takeover, triggering an 18% crash in Metro’s value.
At the time, the bank said its board “strongly believe in the standalone strategy”.
Launched as a disruptor to take on the big lenders, Metro hit a peak valuation of £3.6 billion in 2018 amid a frenzy of brash marketing and a pledge to open branches as competitors closed theirs.
It now has a market cap of around £170 million and an estate of 78 retail branches, mostly on long leases.
Investec has said this high fixed cost base suggests “limited strategic flexibility” for the bank or any potential suitor.
FTSE recaptures Omicron high
15:00 , Simon Freeman
The FTSE100 has nudged above 7200 points for the first time since the sell-off sparked by discovery of the Omicron variant.
Fittingly, British Airways owner IAG - which was most badly bruised by the pandemic panic - is leading the way, up 4% to 137p.
And Ocado, the main beneficiary as market’s slumped , is lagging, down 2.4% to 1588p.
Latex gloves maker Synthonmer is the worst performer on the FTSE350, with shares down 10% on the back of a double downgrade to underweight from Morgan Stanley which sees a “sharp deterioration” in supply outlook.
Uber ruling and EC fears drag down Deliveroo & co
14:17 , Simon Freeman
A double helping of potentially troublesome news has dampened investor appetite for gig economy companies.
Shares in Deliveroo (-6.3%), JustEat (-5.5%) and Delivery Hero (-4.5%) tumbled further from a wave of double-digit losses last week.
The sell-off followed a High Court ruling which deals a blow to Uber's business model in a complex dispute over the app's role in bookings.
Uber brought the case after losing a landmark Supreme Court ruling in February that decided its drivers were workers and therefore entitled to the minimum wage and holiday pay.
Meanwhile, speculation is growing that the European Commission is set to propose stricter rules forcing businesses to employ its couriers directly rather than treat them as workers with lesser employment benefits.
Danni Hewson at AJ Bell, said: "The thorny question of whether or not delivery drivers are employees is about to be answered by the EU Commission later this week and reports suggest the answer will be yes.
"For food delivery businesses like Deliveroo and Just Eat that could mean a huge spike in costs, costs which many expect will be passed on to consumers across central Europe."
Bank chief’s 5% inflation warning
13:31 , Simon Freeman
UK inflation could “comfortably exceed” 5% by the spring when energy bills are set to rise again, the Bank of England’s deputy governor has warned.
Ben Broadbent added that the country’s tight labour market is also likely to be a more persistent source of inflation.
At 4.2%, the latest rate of inflation is more than double the Bank of England’s Monetary Policy Committee’s target rate of 2% and is set to soar further.
Broadbent said: “In the spring of next year, when the next rise in the Ofgem cap on gas and electricity bills comes through, it will probably climb comfortably through 5%, a long way north of the MPC’s 2% target.”
The deputy governor was among seven of the bank’s MPC members to vote to hold interest rates last month.
Investors had expected an interest rate rise at the meeting, but forecasts for a rates rise from 0.1% to 0.25% have cooled due to the emergence of the Omicron variant.
Deutsche Bank say UK economy set to slow further
12:48 , Oscar Williams-Grut
UK GDP numbers are out later this week and Deutsche Bank expects the numbers to show a further slowdown in the pace of recovery.
Sanjay Raja, the bank’s chief UK economist, writes in a note today: “The October GDP report will mark the final set of output data we get in 2021. We expect monthly growth to slow to 0.3% m-o-m. Risks to our projection are finely balanced, if slightly tilted to the downside.
“Looking ahead, Q4 GDP growth should more clearly signal an even slower quarter after growth disappointed in Q3 (1.3% q-o-q). With supply constraints lingering, household spending easing, fiscal support waning, and the labour force remaining smaller than its pre-pandemic level, the recovery should slow further, impacted further by news of Omicron and some modest disruption from Storm Arwen.”
BenevolentAI commits to UK
12:16 , Oscar Williams-Grut
British biotech star BenevolentAI today said it remains committed to the UK after being taken public with a £1.3 billion valuation in Amsterdam via Europe’s biggest ever healthcare SPAC merger.
The firm, which uses artificial intelligence to discover and develop new treatments for complex illnesses, is set to join the Euronext after a reverse takeover by Odyssey, a blank-cheque company founded by the deal-making Zaoui brothers.
The firm was a favourite of Neil Woodford, and the deal could provide a much-needed cash boost to his long suffering investors.Full story
Credit Suisse downgrades European growth forecasts
11:59 , Oscar Williams-Grut
Economists at Credit Suisse have today downgraded their forecasts for eurozone growth next year the emergence of the Omicron variant. Here’s the bank:
The euro area economy is set to hit a speed bump over the winter. A renewed surge in coronavirus cases, along with concerns over the new variant, is already leading to new social distancing restrictions in several countries. And the sharp rise in gas prices has been sustained, which may crimp household and corporate incomes. So we think growth around the turn of the year will be a little weaker than we previously expected, and we forecast that euro area GDP will grow 3.8% next year, a little lower than our prior forecast of 4.2%.
We do not expect those headwinds to persist. Rising vaccine penetration should bring the new wave of cases to an end, and we think the acute squeeze on gas prices should abate in the spring. And the underlying fundamentals for growth look good. Household and corporate balance sheets are robust. And their spending intentions for the coming year are high.
Consequently, we expect the euro area economy to quickly make up any ground lost over the winter. Our forecast of the level of GDP the economy will attain by the end of next year is unchanged.
Amigo sinks further on rescue plan
11:27 , Oscar Williams-Grut
Amigo has been battling to save itself from collapsing under the weight of compensation claims linked to historic mis-selling. A plan to offer partial compensation was rejected by the High Court in May, leaving Amigo on the brink of collapse.
The committee has backed the plan to restart lending, which should deliver a higher payout for mis-sold customers. Amigo has pledged an initial £113 million in redress payments, compared with just £35 million under the plan rejected in May.
Payouts will be partly funded by the better-than-expected performance of Amigo’s loan book during the pandemic but will require fresh funds. Amigo plans to raise up to £300 million of debt and equity from new and existing investors. It is seeking at least £70 million in equity funding.
WPP buys London design agency
10:39 , Oscar Williams-Grut
WPP has bought a majority stake in Made Thought, an agency that employs 55 people across offices in London and New York. Terms weren’t disclosed.
Made Thought was founded in 2000 by Paul Austin and Ben Parker. The company has a heavy focus on design-led marketing and says its “speciality lies in shaping brands — either from the ground up or at times when a new creative energy is needed to set your business apart.”
Made Thought will be folded into WPP’s AKQA business and combined with two other agencies the group bought in 2018.
WPP CEO Mark Read said: “Bringing Made Thought together with Universal Design Studio and Map Project Office to create The New Standard will further strengthen our position as a creative leader and raise the bar for design that speaks to people across different platforms.”
Shares in WPP rose 8p, 0r 0.7%, to 1073p.
Clarkson surges, FTSE 100 higher
10:29 , Graeme Evans
Shipping broker Clarkson has been around since 1852, but few years in its recent history have been as eventful as the one that's just rocked the global supply chain.
The Ever Given blockage in the Suez Canal, congestion in ports and the physical shortage of containers have all contributed to major disruption and soaring freight rates.
Overall, these conditions continue to be favourable for Clarkson, which brokers deals for the huge tankers that carry crude or for dry cargoes of iron ore or grain.
Its shares jumped 7% today as Clarkson revealed that 2021 results will be ahead of City expectations, aided by a particularly strong performance in its broking division.
The stock rallied 240p to 3925p but Liberum analyst Gerald Khoo believes they have the potential to reach 4470p after raising his 2021 earnings forecast by a fifth.
Clarkson contributed to a strong session for the FTSE 250 index, which rose 126.56 points to 22,772.82 amid hopes that symptoms associated with the Omicron variant are mild.
The optimism sent FirstGroup shares 8% higher ahead of a trading update later this week, while National Express and railway caterer SSP were up more than 2%.
There was a further boost for the UK economy when it emerged that construction companies enjoyed a sharp increase in activity during November.
The FTSE 100 index rose 56.75 points to 7179.27 in a strong session for commodity-focused stocks including BP. British Airways owner IAG also continued its recent recovery, adding 1.1p to 132.76p despite the return of pre-departure Covid-19 checks at UK airports.
BT shares lifted 2p to 170.6p after it was reported to be in talks with America's Discovery about a potential joint venture for their sports businesses.
Irn Bru owner AG Barr buys oat milk maker Moma Foods in firm’s first step into wellness market
10:10 , Naomi Ackerman
Irn Bru owner A.G. Barr has made a first move into the wellness market, signing a deal to buy Deptford-based oat milk and porridge maker Moma Foods.
The Scottish firm has taken an initial 60% stake in Moma - the UK’s third-biggest oat milk brand - and agreed a path to full ownership over the next three years.
AG Barr is looking to capitalise on soaring demand for plant-based milks, which has seen rival Oatly valued in the billions.
Boss Roger White said he is delighted to be entering such a “fast-growing category”.
It comes as competition in the space heats up and firms look to invest. Fellow listed soft drink producer Britvic snapped up another London-based health drink brand, Plenish, earlier this year.
Shares rose 1.2%, or 6.3p, to 526p, this morning on the update.
Read the full coverage here
Franco Manca owner Fulham Shore swings to profit as theatreland and City restaurants top 2019 takings
09:28 , Naomi Ackerman
Fulham Shore, the firm behind Franco Manca and The Real Greek, has revealed its central London restaurants traded above 2019 levels in November as people headed out around the capital.
The AIM-listed company also reported returning to a modest profit in the six months to September 26 despite operating with restrictions during much of the period. (Franco Manca in particular took advantage of the lockdown takeaways boom).
It reported post-tax profits of £2.4 million for the half, from a £3 million loss in the same period last year.
Chairman David Page said the company expects the group’s full year performance to top market expectations.
Shares surged as much as 8% in early trading on the update.
Read the full story here
IAG, easyJet rise despite new travel rules
08:28 , Graeme Evans
The FTSE 100 index is 46.12 points higher at 7168.44, with travel-based stocks among those higher despite the re-introduction of pre-departure Covid-19 tests.
British Airways owner IAG rose 2.3p to 134p and hotels group InterContinental lifted 77p to 4621p near the top of the blue-chip risers board. Oil giants BP and Royal Dutch Shell also offered support.
BT Group shares rose 2.5p to 171.1p after it was reported to be in talks with America's Discovery about a potential joint venture for their sports businesses.
Taylor Wimpey also added 1.55p to 164.55p amid speculation that activist investor Elliott has taken a stake in the housebuilder. In contrast, Persimmon fell 37p to 2769p near the top of the FTSE 100 fallers board.
The FTSE 250 index rose 124.51 points to 22,770.59, with easyJet 2% higher. Shipping broker Clarkson also jumped 5% after it raised full-year forecasts.
BenevolentAI heads for Euronext listing
07:58 , Graeme Evans
Cambridge-based BenevolentAI, which uses big data and deep learning to discover more effective medicines, has been valued at up to 1.5 billion euros (£1.3 billion) in one of Europe's biggest special purpose acquisition company (SPAC) mergers.
The combination with Odyssey also creates one of Euronext Amsterdam's largest ever biotech listings.
Founded in 2013, BenevolentAI has built a AI-based drug discovery platform that enables the delivery of drug candidates with a higher probability. It recently discovered a treatment for Covid-19 which has been approved by the US healthcare regulator.
The funds will be used to accelerate BenevolentAI’s development, scale-up its clinical pipeline and continue investment in its technology platform.
Evergrande slumps, bitcoin recovers
07:40 , Graeme Evans
Evergrande shares have dived to an 11-year low after the struggling property developer warned there was no guarantee it had enough funds to meet debt obligations.
The 12% slide took place at the end of a 30-day grace period for the repayment of $82.5 million, which was originally due on November 6.
With Evergrande holding liabilities worth a reported $300 billion, any default has the potential to spark contagion across Asia's property sector.
Hong Kong's Hang Seng index reflected the Evergrande jitters on Monday, with worries over the Omicron variant of Covid-19 also contributing to a 1.7% decline.
The mood of European markets appears to be more resilient at the start of the week, with CMC Markets forecasting that the FTSE 100 index will open 48 points higher at 7,170.
The improvement continues the recent choppy trading performance after the FTSE 100 index closed lower on Friday following disappointing monthly US jobs figures.
On the commodity market, Brent crude futures rose 2.5% to $71.56 a barrel after Saudi Arabia raised January prices to Asian and US customers by $0.60 a barrel.
Bitcoin stood at $48,206 after a wild weekend in which the cryptocurrency fell by $10,000 in the space of a few minutes on Saturday.
The low of near to $42,000 compares with $57,000 earlier on Friday and was blamed on jitters caused by the Omicron variant.