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FTSE 100 Live: European markets ease as Omicron spreads

·14-min read
 (ESI)
(ESI)

Stock market sentiment continues to see-saw after Wall Street fell last night on the discovery of the first Omicron case in California.

The FTSE 100 index eased today, having rallied 1.6% during its best session in four months yesterday.

The volatility comes as OPEC and its production allies consider whether to shift their supply plans in response to the variant. Brent crude rose 1% today but is still below $70 a barrel.

Key Points

  • OPEC maintains output increase plans

  • Abrdn buys Interactive Investor for £1.5 billion

  • Selfridges close to being sold for £4 billion

FTSE 100 wrap: European markets ease as Omicron spreads

16:47 , Naomi Ackerman

Stock market sentiment eased in Europe today as Omicron spreads and several nations consider compulsory Covid vaccination.

Yesterday saw a big rebound, with the FTSE 100 rallying 1.6% during its best session in four months. But today London’s topflight index closed down 38.9 points, or 0.5%, at 7129.

Darktrace topped the fallers, down nearly 9%, or 43p, to 433.8p, after news emerged the cybersecurity giant is being relegated out of the blue-chip stock index.

BT topped the index followed by BHP and Shell. The oil giant today announced the launch of a $1.5 billion share buyback – its first stage of returning cash to shareholders from the sale of its US Permian business.

Elsewhere in Europe the German Dax closed down 192 points, or 1.2%, and Amsterdam’s Euronext down 17 points, or 1.3%.

OPEC and its oil-producing allies announced this afternoon that they would to go ahead with planned 400,000 barrel per day production hike in January. Oil initially dipped on the announcement, before closing up around 1%, but still below $70 a barrel.

The alliance said in a statement that “the meeting remains in session,” however, meaning they can make “immediate adjustments” should the current market conditions shift. ​

Across the Atlantic, Wall Street had an improved session. The Dow was up 1.7% and the Nasdaq up 0.5% just before midday.

Joshua Mahony, Senior Market Analyst at IG, said: “Oil prices have bounced from their lows, while US stocks have made early gains, but the overall atmosphere in markets remains nervous.”

He added: “What is clear is that the see-saw week is still with us; swings in risk appetite have been dramatic and rapid over the past few sessions... Broadly, the market is still worrying about the Omicrom variant and how it will affect Fed policy, and the interaction of these two issues has provided the fertile soil necessary for the recent selloff.”

That’s all from us on the blog today, join us again tomorrow.

City comment: Seedrs sale to Republic has the CMA’s finger prints all over it

15:34 , Naomi Ackerman

Catching up with the news elsewhere... Crowdfunding platform Seedrs has sold itself to US investment firm Republic - a year after the Competition and Markets Authority ruled out a merger with fellow UK-based platform, Crowdcube.

Our City Editor Oscar Williams-Grut asks: Is the UK’s competition watchdog really helping Britain?

Read the opinion piece here

OPEC stick to its plan to increase output

14:51 , Oscar Williams-Grut

OPEC has reportedly decided to stick to its plan to increase oil output in January. Here’s the BBC’s Sameer Hashmi:

Deutsche Bank says: “Newswires are reporting that OPEC has just decided to further increase oil production in coming weeks despite the oil reserve releases from the US and other countries last month. Earlier this week Michael Hsueh in the team published a bearish oil outlook arguing WTI will break below $60 next year. His number crunching suggests that the oil market will shift in to a big surplus and over-supply next year, and this was assuming a delay in OPEC production increases which are now going ahead.”

Brent oil is down 1.6% to $67.75.

Shareholder battle continue to rage at Third Point

14:32 , Oscar Williams-Grut

The activist investor targeting a feeder fund of investor Dan Loeb’s Third Point today vowed to keep fighting despite losing a shareholder vote on its proposals.

Asset Value Investors (AVI) has been lobbying Third Point Investors, a London listed feeder fund, to introduce reforms meant to narrow the gap between the fund’s share price and the value of underlying assets. Third Point has consistently opposed the calls, instead coming up with its own proposals.

AVI secured a vote on ousting Joshua Targoff, Loeb’s representative on the board, which is said was a proxy for its proposal. That resolution was defeated yesterday, with 75% of votes cast backing Targoff. Third Point said fewer than 20% of eligible votes went against their man.

Prior to the vote, AVI had vowed to give up if it was defeated. Third Points said it hoped the activist investor would “now cease in its attempts to impose its self-serving agenda”.

However, AVI today vowed to fight on, claiming that Third Point’s portrayal of the vote was “misleading”.

Read the full story.

Abrdn’s £1.5 billion interactive investor deal confirmed

12:32 , Oscar Williams-Grut

As expected, abrdn has secured a £1.49 billion takeover of interactive investor, a deal that will gives the giant fund manager better access to the small stock picking market. We flagged that the deal was close to completion earlier today.

The deal is a further sign of how intense competition is to lure small investors, those either playing the market for the first time, or looking to manage already established portfolios.

Interactive, founded in 1995, had been plotting its own stock market listing but instead will seek shelter inside Abdrn, which overseas assets of about £530 billion.

CEO Richard Wilson will remain in charge, reporting into Abdrn boss Stephen Bird.

Read the full story.

Selfridges closing in on £4 billion sale

11:15 , Oscar Williams-Grut

Selfridges is inching closer to changing hands for the first time in almost 20 years, as a Thai buyer draws closer to finalising a deal.

Thailand’s Central Group is in advanced discussions with the Weston Family, Selfridge’s Canadian owners, about a possible £4 billion deal to buy the retailer, according to The Times. A sale would include the iconic Oxford Street store as well as regional branches in Birmingham and Manchester and Selfridge’s international business in Ireland and the Netherlands.

The Westons, who bought Selfridges in 2003, put the shop up for sale earlier this year after receiving an approach from a mystery buyer. Credit Suisse has been running the process. Other bidders said to have been interested include Qatar’s sovereign wealth fund and luxury Hong Kong department store group Lane Crawford.

The Westons are said to be keen to seal a sale by the end of this year. A representative declined to comment.

Read the full story.

Mood turns again as FTSE 100 falls

10:35 , Graeme Evans

A company whose last experience of life in the FTSE 100 index came during the dotcom bubble is today celebrating its return to the ranks of Britain's biggest firms.

Electrocomponents, which was founded as Radiospares in 1937 and distributes 500,000 industrial and electronics items, spent two years in the top flight between 2000 and 2002.

It has been in the FTSE 250 index ever since, but is set to make a blue-chip return after seeing its share price more than double since the early days of the pandemic.

Alongside Electrocomponents, veterinary services business Dechra Pharmaceuticals will join the FTSE 100 index for the first time when the reshuffle takes effect on December 20.

Dechra floated on the stock market in 2000 at a price of 120p, but is now trading at 5010p for a market valuation of £5.5 billion. That was enough to win a top flight place at the expense of Johnson Matthey and cyber security business Darktrace.

Johnson Matthey is a founding member of the FTSE 100 index in 1984 and has been an ever-present since 2002, having been relegated once before in December 1984.

Shares in Electrocomponents and Dechra marked the reshuffle, which was confirmed by FTSE Russell last night, with falls of 23p to 1201p and 40p to 5010p respectively.

Their performance reflected a downbeat session after the discovery of the first Omicron case in the United States soured the mood following yesterday's big rebound.

The FTSE 100 index fell 38.75 points to 7129.93, with Alibaba investor Scottish Mortgage Investment Trust among those lower during a poor session for tech-based stocks.

On a brighter note, there was a further rise of 2% for British Airways owner IAG and Royal Dutch Shell lifted 15p to 1622.8p as it commenced $1.5 billion of share buybacks.

The FTSE 250 index fell 170.92 points to 22,741.81, despite easyJet and Cineworld rising more than 4% and outsourcing firm Serco lifting 1.3p to 135.1p on the back of plans to accelerate growth in shareholder returns.

Halfords shares added 14.4p to 334.8p in the FTSE All-Share after the retailer successfully raised £63 million from City investors. Proceeds from the placing of shares at a price of 320p will go towards the acquisition of tyre servicing business National.

Auction Technology Group sales soar as sector’s lockdown shift to online sticks

10:29 , Naomi Ackerman

Auction Technology Group has seen revenues surge as the lockdown-era shift to online auctions appears to be outlasting restrictions.

ATG floated valued at around £600 million in February and today has a market cap of around £1.5 billion.

On Thursday it reported £70.1 million in revenues for the year to September 3, up 34% on the £52.3 million seen a year earlier.

High profile lots sold included a rare box of Pokemon cards for £16,000 and a Banksy screen print, snapped up for £70,000.

Shares held steady at 1322p on the update.

Read the full story here

FTSE 100 slips, Shell higher

09:09 , Graeme Evans

The FTSE 100 index has surrendered some of yesterday's gains, declining 50.41 points to 7118.27.

Tech-focused shares dominated the fallers board, with Alibaba investor Scottish Mortgage Investment Trust and Ocado among those 2% lower. Royal Mail dropped 5% after its shares went ex-dividend.

Royal Dutch Shell topped the risers board, lifting 8.6p to 1616.4p as it commenced $1.5 billion of share buybacks as part of $7 billion of shareholder distributions due from the sale of the company’s Permian business.

The FTSE 250 index fell 177.05 points to 22,735.68, despite a further 1% rise for easyJet.

AJ Bell: new breed of small investor worth billions

09:06 , Simon English

AJ Bell is booming thanks to a surging interest in shares from new investors -- a market it believes could be worth many billions of pounds.

Lockdown saw a new breed of investor with cash saved from the closure of pubs and restaurants buying shares for the first time.

The investment platform and Hargreaves Lansdown rival saw nearly 87,500 new customers arrive in the year to September, taking the total to 382,750.

According to the Financial Conduct Authority there are another 8.6 million people in Britain with £10,000 of what it calls “investable” cash – money that isn’t needed for day-to-day running expenses.

read more here

Abrdn close to Interactive takeover

09:04 , Simon English

Abrdn is poised to secure a £1.5 billion takeover of interactive investor, a deal that will gives the giant fund manager better access to the small stock picking market.

Confirmation of the takeover is likely at some point today.

The deal is a further sign of how intense competition is to lure small investors, those either playing the market for the first time, or looking to manage already established portfolios.

read more here

Deliveroo drops on founder’s share sale

08:40 , Oscar Williams-Grut

Deliveroo founder Will Shu has sold £47 million-worth of stock in his takeaway app business to satisfy a tax liability.

Deliveroo said Shu and the company’s CFO Adam Miller had both sold stock to pay off tax bills arising from vested shares. Both men have incentive agreements in place that rewards them with new shares in the company over time, subject to conditions.

Shu was handed £62.5 million in stock on Wednesday under the terms of the agreement. Tax rules mean he was faced with a bill as the stock vested. He sold 16.9 million shares at £2.78 - a 4% discount to yesterday’s closing price - via an accelerated bookbuild run by Goldman Sachs.

Miller was handed shares worth £2.3 million and sold £1.9 million to settle his tax bill. Neither man stands to financially benefit from the transactions, with cash only covering tax liabilities.

Shares have dropped 13p or 4.4% to 277p.

Read the full story.

Glaxo upbeat on Covid-19 drug treatment

08:37 , Graeme Evans

A Covid-19 drug treatment developed by GlaxoSmithKline has been found to be effective against all variants including Omicron.

The pharmaceuticals giant said Xevudy (sotrovimab) cut hospital admission and death by 79% in those at risk.

Dr Hal Barron, Glaxo’s chief scientific officer, said: “Though early, these pre-clinical data support our long-held view on the potential for sotrovimab to maintain its activity as the virus continues to mutate.”

It has been authorised by the Medicines and Healthcare products Regulatory Agency for people with mild to moderate Covid-19 who are at high risk of developing severe disease.

Read more here.

Selfridges in takeover spotlight

08:11 , Graeme Evans

Department store chain Selfridges is reported to be on the brink of new ownership.

According to The Times newspaper, Thailand-based retail conglomerate Central Group has agreed a deal to buy the business from the Weston family.

Selfridges has 25 stores globally, including the flagship Oxford Street site as well as branches in Dublin, the Netherlands and Canada. The Westons have owned the business for 18 years and are thought to be seeking about £4 billion from a sale.

It is believed it could take the rest of the year to complete the deal. Selfridges has declined to comment.

Johnson Matthey loses FTSE 100 status

07:55 , Graeme Evans

Johnson Matthey and cyber security firm Darktrace are to lose their places in the FTSE 100 index.

The latest quarterly review was confirmed last night, with Dechra Pharmaceuticals and Electrocomponents due to become blue-chip companies from the start of trading on Monday, December 20.

Johnson Matthey is a founding member of the FTSE 100 index in 1984 and has been an ever-present since 2002, having been relegated once before in December 1984.

The speciality chemicals firm is now worth £4 billion after shares fell sharply following last month’s profits warning and decision to pull out of electric vehicle battery development.

Omicron case in California hits Wall Street trading

07:38 , Graeme Evans

This week's yo-yo performance by financial markets is set to continue amid expectations the FTSE 100 index will give up 70 points of last night's 109 points rise.

The gains yesterday were widespread on hopes that the Omicron variant of Covid-19 will not be as bad as had been feared at the time of Friday's stock market rout. Big risers in London included British Airways owner IAG after shares lifted 3%.

The FTSE 100 index had its best session since July with a gain of 1.6%, but that was before US markets weakened on the discovery of the first Omicron case in California.

The Dow Jones Industrial Average and S&P 500 closed down by more than 1% to set the tone for a negative start to trading in London.

Michael Hewson, chief markets analyst at CMC Markets, said: “Sentiment has seesawed considerably over the past few days.

“While it is universally acknowledged that cases of the Omicron variant are likely to spread, it surely can’t have been too much of a surprise to anyone that cases would soon start to be reported in the US.”

Opec ministers are meeting later, with the cartel and its allies set to decide whether to release more oil into the market as they had previously planned or to restrain supply in light of concerns over the economic impact of the Omicron variant.

Brent crude futures have fallen by more than $10 a barrel in the past week, but they recovered slightly ahead of today's meeting to stand at $69.72.

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