MARKET REPORT: Global stock markets stabilise after Omicron sell-off

MARKET REPORT: Global stock markets stabilise after brutal sell-off sparked by emergence of the Omicron variant

Global stock markets stabilised after the emergence of the Omicron variant triggered a brutal sell-off last week.

The FTSE 100 gained 0.9 per cent, or 65.92 points, to 7109.95 while benchmarks in Europe also crawled a little higher.

But the rebound made up only a fraction of the ground lost on Friday when the Footsie tumbled nearly 4 per cent – wiping £72billion off the value of blue chip stocks.

The rebound made up only a fraction of the ground lost on Friday when the Footsie tumbled nearly 4 per cent ¿ wiping £72bn off the value of blue chip stocks.

The rebound made up only a fraction of the ground lost on Friday when the Footsie tumbled nearly 4 per cent – wiping £72bn off the value of blue chip stocks.

With so much information and misinformation swirling around trading desks, investors remained on tenterhooks.

Adam Pollock, head of broking at WH Ireland, said: ‘It’s hard to know what’s true.

‘How contagious is this, can the vaccines fight it, and are the new restrictions necessary?

‘All these questions need to be answered before the market heads in any meaningful direction.

Stock Watch – AG Barr

Irn Bru maker AG Barr will beat profit forecasts amid strong sales momentum in recent months.

The Scottish business said sales since September ‘have grown ahead of our expectations’. 

The drinks firm has been buoyed by the return of more normal habits as people head back to offices in city centres, as well as the recovery of bars and restaurants.

Revenues are expected to be around £264million for the year, with a forecast pre-tax profit of around £41million, assuming there are no big changes to market conditions.

Shares soared 13 per cent, or 61p, to 529p.

‘Today’s recovery is a start but it’s important to remember the market fell nearly 4pc on Friday so we’re not even half way there.’

Pollock pointed out that the stock market is about future earnings, not present, and for now traders are betting against further lockdowns. 

As a result, airlines moved higher with Easyjet adding 0.6 per cent, or 2.8p, to 502.6p while Wizz Air climbed 5.5 per cent, or 204p, to 3933p. British Airways-owner IAG made early gains, but eventually closed down 0.3 per cent, or 0.4p, at 131p.

Other travel-related stocks such as cruise operator Carnival (up 2.8 per cent, or 33.6p, at 1216.4p) WH Smith (5.5 per cent, or 72.5p, at 1383.5p) helped drive the FTSE 250 up 1 per cent, or 218.44 points, to 22756.33.

Back in the top flight, the oil giants were a driving force, with BP up 3.2 per cent, or 10.05p, to 327.7p and Shell up 2.4 per cent, or 37.6p, to 1594p.

A barrel of Brent crude rose by 4 per cent, hovering at around $74 a barrel, a sharp improvement from Friday when it had dipped more than 10 per cent.

Analysts at JP Morgan expect prices will continue to rise.

The Wall Street bank reckons Brent will reach $125 a barrel in 2022 and $150 a barrel the year after due to a lack of spare capacity.

At a key Opec meeting this week, the production cartel will be weighing up the threat of the Omicron variant on global demand as well as recent releases of oil reserves by the US.

But while oilers recovered, banks were having a mixed session as the debate about when interest rates might rise raged on.

The emergence of the variant has clouded the outlook for the Bank of England’s December 16 interest rate decision, and economists believe a hike may now be delayed until next year.

Traders and analysts had been confident of a 15 basis point rate hike to 0.25 per cent with pressure on the bank to get a grip on soaring inflation, which hit a decade high in October.

Laith Khalaf, head of investment analysis at AJ Bell, said Omicron had ‘punctured expectations of a Christmas rate hike’, with markets now expecting the rise will occur in February instead.

His words echo those of Bank of England chief economist Huw Pill who last week said that the latest strain of Covid-19 and any reintroduction of government restrictions as a result ‘clearly would change our view of the world’.

He described the emergence of Omicron as ‘a punch in the face.’ Banks tend to perform better when interest rates are rising and as a result only managed minor gains. 

Lloyds was up 1.7 per cent, or 0.8p, to 46.8p, Natwest gained 1.1 per cent, or 2.2p, to 210.4p and HSBC added 0.6 per cent, or 2.4p, to 416.45p.

One sector firmly in the red was trading platforms after performing strongly on Friday.

The Covid lockdowns have seen a spike in amateur traders, mostly young men in their bedrooms with time and money to spare betting on the stock market. 

But yesterday Hargreaves Lansdown lost 5.6 per cent, or 80p, at 1341.5p, and AJ Bell was off 0.1 per cent, or 0.4p, at 396.8p.

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