The resurgence of airline and leisure stocks slowed today as some of the new year fizz came out of the London market.
The FTSE 100 index produced a more subdued performance after yesterday's 1.6% opening day rally took London's top flight to its highest level since the start of 2020.
Wall Street markets set the tone for today's downbeat session as rising bond yields triggered a flight away from high growth stocks.
FTSE flat after bumper first day of trade
Playtech gives Eddie Jordan more time to work on offer
Strong Christmas for supermarkets
Oil firm after OPEC+ meeting
FTSE 100 edges up on Omicron optimism
17:03 , Joanna Bourke
London’s blue chip index ended Wednesday 11.72 points higher at 7516.87.
Oliver Males at Spreadex said: “Continued optimism over the minimal negative impact of the Omicron variant continues to please investors.”
Males said: “The gains were not quite as strong in the UK today, as some of the new year buzz dissipated, although it has still managed to push the FTSE 100 to its highest level since the beginning of 2022.”
British Airways owner IAG was 1.45% higher on the FTSE 100 index. Earlier today the Prime Minister announced pre-departure tests would be scrapped from 4am on Friday for travellers heading to the UK.
The requirement to self-isolate on arrival until receipt of a negative PCR test will also be scrapped, he told the House of Commons.
London City Airport’s chief executive Robert Sinclair said: “Today’s announcement to ease travel restrictions is hugely welcomed and gives our sector a significant boost and renewed optimism for 2022. ”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: ‘’The relaxation of testing rules is the late-late Christmas present the travel industry had been holding out for. Shares in London listed airlines lifted again today – as the rumour mills swirled that lateral flow tests would replace expensive PCRs on arrival in the UK, and pre-departure tests would be scrapped – a move confirmed by the government near the end of the trading day.
Other risers on the FTSE 100 included Ocado, which gained 49.5 p to 1605.5p. The increase came on the same day that data from Kantar showed encouraging growth for the online supermarket business.
That is all from the City desk today. We will be back tomorrow.
Britons expected to order nearly 8m low-or-no-alcohol pints this month as low-bev sector booms
16:35 , Naomi Ackerman
Britons are set to drink nearly 8 million pints of low-and no-alcohol beer this month as Dry January resolutions come in amid a boom in the low-bev sector, according to a major trade body.
The estimation comes after a couple of years in which assorted drinks giants created new and improved alcohol-free beers.
Brands are targeting a burgeoning market and younger consumers.
Read the full story here
London office spend returns to pre-pandemic level
13:28 , Joanna Bourke
Investor spend on central London offices returned to pre-pandemic levels in 2021, with buyers looking at tenant demand beyond work from home guidance, according to new research.
Preliminary figures from property agent CBRE show transactions of offices reached £11.3 billion.
That was 49% ahead of the £7.6 billion recorded in 2020, and matched what was seen the prior year.
Read more HERE.
FTSE 100 higher at lunch time
13:07 , Joanna Bourke
The new year rebound for the FTSE 100 index continued today, up 8.67 points at 7,513.82 at 1pm.
Airline and leisure stocks are clinging to the gains achieved yesterday in the first trading session of the year, when fading Omicron worries helped the top flight rally. Shares in IAG and easyJet are respectively currently up 1% and 2.67%.
News to catch up from this morning includes:
-Goldman Sachs predicts bitcoin could hit $100,000 if investors embrace ‘new gold’
-Trailer provider to the stars becomes London’s first float of 2022
-Playtech’s £2.7 billion Aristocrat sale hits snag as Eddie Jordan given more time for counter offer
-Tech entrepreneur Henry de Zoete joins model railway firm Hornby as NED
Goldman Sachs says bitcoin could hit $100,000
12:42 , Oscar Williams-Grut
In a note sent to clients this week, foreign exchange analysts at the US investment bank said bitcoin could reach the level in the next five years as it continues to win market share from gold in the “store of value” market.
“Bitcoin currently commands a roughly 20% share of the “store of value” (gold plus Bitcoin) market,” analysts wrote. “We think that Bitcoin’s market share will most likely rise over time as a byproduct of broader adoption of digital assets.
“Hypothetically, if Bitcoin’s share of the “store of value” market were to rise to 50% over the next five years (with no growth in overall demand for stores of value) its price would increase to just over $100,00.”
Tech entrepreneur and Vote Leave campaign veteran joins model railway maker Hornby as NED
10:17 , Naomi Ackerman
Listed model railway maker Hornby has tapped up tech entrepreneur and former Dragons' Den success Henry de Zoete as its latest non-executive director.
The angel investor, who secured a top deal on the hit BBC show, founded auto-switching startup Look After My Bills, which was acquired by Go Compare parent company, GoCo, in 2019.
de Zoete is currently also an NED on the board of the Cabinet Office, and previously worked as Vote Leave's digital director and as a special adviser to Michael Gove.
The entrepreneur said Hornby's offerings are "incredible, heritage brands that I grew up with" and that he is excited to give "strategic input" as the company "focuses on digital transformation and growth."
Hornby was founded back in 1901 when Frank Hornby patented children's set Meccano, and has seen sales surge in recent years. The firm is undergoing transformation under its current boss.
London sees first IPO of 2022
10:15 , Naomi Ackerman
London saw its first IPO of the year this morning as trailer-to-portaloo provider to the stars, Facilities by ADF, floated on AIM.
The Wales-based company, whose clients include Netflix, Disney and the BBC, supplied every series of the streaming service’s hit Peaky Blinders - including actors’ living quarters and make-up trucks.
The firm floated under the ticker ADF at 50p per share with an estimated market cap of £37.8 million. By mid-morning its shares were trading at 54.5p.
ADF was launched back in 1992 by founder Andy Dixon, who converted an old bus into a dining trailer, and now has over 500 trucks. It raised £18.4 million in the IPO, and chairman John Richards said the new cash will help the company " meet increasing demand" in the UK’s TV and film production industry amid the streaming boom.
London alone is to get a new 150,000 sq ft studios in Brent Cross this year, and see the revamp and expansion of the historic Twickenham Studios.
Cenkos Securities acted as nomiated advisor and sole broker on the IPO.
Playtech delays takeover vote
09:59 , Oscar Williams-Grut
Playtech’s £2.7 billion sale to Australian slot machine giant Aristocrat is hanging in the balance after the London-listed gambling business moved to delay a shareholder vote on the deal.
Playtech, which makes software for gambling companies, said it was pushing back shareholder approval of the Aristocrat deal. A vote was originally slated for 12 January but will now be held on 2 February.
The board has pushed back the deadline to give more time for a possible counter bid from a consortium led by Formula One tycoon Eddie Jordan. Jordan and gambling industry veteran Keith O’Loughlin began running to rule over Playtech in November and have asked for more time to work on a potential offer. The pair now have until the 26 January to make a firm offer or walk away. Playtech said talks were “progressing”.
The update will fuel speculation that a bid gazumping Aristocrat is imminent. Peel Hunt analyst Ivor Jones said the delay suggested there was “sufficient substance to the potential offer from JKO,” the consortium led by Jordan and O’Loughlin.
09:07 , Oscar Williams-Grut
Analysts see todays action as a consolidation phase after yesterday’s strong gains on the FTSE.
Richard Hunter, head of markets at interactive investor, said: “After a sprightly start to the New Year, investor focus switched to the more pressing issue of interest rate hike expectations.
“Rising Treasury yields in the US prompted a bout of rotation from high growth stocks, such as technology, into value, boosting financial and industrial shares.
“The rotation bore down on the Nasdaq index and left the S&P500 virtually flat, although it also propelled the Dow Jones Industrial Average to another record closing high, despite a manufacturing reading which came in slightly shy of expectations, but nonetheless confirmed continuing growth.
“Asian markets were mixed following the draught from Wall Street, with similar themes playing out as technology shares came under pressure, with local currencies also reacting negatively to the ongoing strength of the greenback.
“The more circumspect sentiment from other markets inevitably unsettled UK investors in early trade, following a strong initial session for the year.
“More broadly, the imminent reporting season will provide further opportunities for companies to demonstrate their most recent progress and, in particular, could help assuage some of the concerns arising from the perceived economic impact of the Omicron variant on recovery hopes.”
Neil Wilson at Markets.com says: “You’ve got this real split between the worries around Omicron and the spread of new variants potentially impacting the economy and the fact that rates are going up, inflation is high, and the economy is doing just fine. That left the market dinging around a bit sideways – with some genuine volatility — during November and into December before we got the Santa rally at the back end of last month. The market is taking up that usual seasonal strength with some vigour again in January.”
Airline stocks consolidate new year gains
08:42 , Graeme Evans
The FTSE 100 index fell by a smaller-than-expected 7.1 points to 7498.04, with yesterday’s big gains in the airline and leisure sector largely untouched.
British Airways owner IAG was 0.9p lower at 157.62p, having jumped 11% yesterday on hopes for a brighter 2022. InterContinental Hotels added a further 66p to 5094p.
Ocado recovered by 53p to 1609p at the top of the FTSE 100 risers board as the grocery technology business put back a big chunk of the 7% fall seen yesterday.
Lloyds Banking Group also traded above 50p a share amid expectations for a further hike in UK interest rates in the early part of this year.
The FTSE 250 index was little changed at 23,8891, with Cineworld the biggest riser after a 2% improvement.
Oil prices firm after OPEC+ meeting
08:20 , Graeme Evans
Brent crude stands at just above $80 a barrel this morning after OPEC+ producers yesterday stuck by plans to increase output by 400,000 barrels per day in February.
The decision, which reflects hopes that Omicron won't be a significant drag on demand, left Brent trading at its highest level since the variant first emerged.
Oanda senior market analyst Craig Erlam said: “It's clear based on yesterday’s meeting that downside risks to demand from the new variant never materialised and the group is far more comfortable with the outlook based on the data they've seen.
“This will be encouraging for investors and could keep oil prices elevated around $80.”
The next Opec+ meeting takes place on February 2.
Supermarkets enjoy good Christmas
08:11 , Oscar Williams-Grut
Fresh data just out from market research business Kantar suggests supermarkets enjoyed a good festive season this year.
Brits spent £11.7 billion in supermarket in December, with own-brand sparkling wine and crisps in high demand. Christmas spending in the month was down slightly on the record December total in 2020.
Online shopping fell by 3.7% year-on-year as people returned to supermarkets despite the rise in Omicron cases.
Kantar recorded the largest number of in-store visits to supermarkets since the very early stages of the pandemic prior to the first lockdown. The new peak came on 23 December.
Kantar said Tesco remained the biggest supermarket in the UK with 27.9% market share and saw the smallest year-on-year decline in sales among the Big Four.
Ocado was the only major retailer not to see a fall in sales on last year, growing its take by 2.5%, while spending at Aldi was flat on 2020.
Tech stocks under pressure
08:03 , Graeme Evans
Tech stocks were under pressure in New York after the 10-year US bond yield posted its biggest increase over two consecutive sessions since September.
The spike came amid expectations that US policymakers may respond to improved economic conditions by hiking interest rates in the first half of the year.
The FANG+ index, which covers ten high-growth tech stocks including Facebook, Apple and Netflix, fell 1.7% last night as rising bond yields tend to diminish the appeal of companies built around future cash flows.
Wall Street rotated towards cyclical stocks as the Dow Jones Industrial Average bucked the downward trend to post another record high.
FTSE 100 loses new year fizz
07:37 , Graeme Evans
The new year rush to buy London stocks is set to slow today after the FTSE 100 index finished its first trading session of 2022 more than 1.6% higher yesterday.
The expectations for a more subdued session follow a mixed performance on Wall Street, where rising bond yields sparked a move out of high growth stocks towards value plays.
The tech-focused Nasdaq fell 1.3%, whereas the Dow Jones Industrial Average rose another 200 points to set a fresh all-time high. Tesla was among the fallers in New York, dropping 4% after better-than-expected delivery figures sent shares up 13% in the previous session.
Most markets in Asia fell overnight and forecasts suggest that the FTSE 100 index will open 37 points lower at 7468.
The decline follows a strong session for leisure and travel stocks as hopes that Omicron cases among adults may have plateaued in the UK boosted the outlook for 2022 bookings.
British Airways owner IAG posted the strongest blue-chip performance with a rise of 11% and low-cost airline Wizz Air set the pace in the FTSE 250 index with a gain of 12%.
Oil prices, meanwhile, traded near $80 a barrel after OPEC+ stuck to its existing production plans by increasing output by 400,000 barrels a day in February. The decision reflected hopes that the demand impact from Omicron will be short-lived.