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08 Dec 2021 | 16:00

London close: Stocks weaker on reports of 'plan B' restrictions

(Sharecast News) - London stocks ended Wednesday's session just below the waterline, with the pound sinking on reports the government was preparing to impose fresh Covid-19 restrictions on England. The FTSE 100 ended the session down 0.04% at 7,337.35, and the FTSE 250 was also 0.04% weaker at 23,229.88.

Sterling was last 0.08% weaker on the dollar to trade at $1.3233, as it slid 0.65% against the euro to €1.1678.

"Sterling has been on the receiving end of selling pressure today, with the UK seemingly on the cusp of a fresh bout of restrictions thanks to the rapid growth in Omicron cases," said IG senior market analyst Joshua Mahony.

"GBP-USD dropped into levels not seen since almost a year ago, with traders weighing up the monetary policy implications of future restrictions.

"Goldman Sachs has shifted their Bank of England rate expectations in response to this latest surge in Omicron, with analysts across many of the top investment banks expecting to see the MPC hold off in favour of a February rate hike."

Mahony said travel and leisure stocks were also lagging behind in the UK, with recent optimism starting to wane on the prospect of greater government oversight.

"Nonetheless, it is important to note that while short-term measures to slow the spread of the virus may dampen economic activity over the short-term, the recent data has certainly helped allay some of the fears evident within markets last week."

The pound earlier dropped to its lowest level for more than a year, after reports emerged that the government was preparing fresh pandemic restrictions.

Ministers and officials met on Wednesday to discuss moving to the so-called 'plan B', with some measures due to take effect that evening, according to the Guardian.

People in England could be required to work from home where possible, and undergo vaccine certification, with prime minister Boris Johnson possibly holding a press conference later in the evening.

Johnson also wanted to "regain the initiative" after it reported his staff held a party in December 2020 when gatherings were banned, the Financial Times said.

The affair caused chaos in Downing Street after ITV showed footage of senior officials discussing the party at a mock news conference.

Those reports all but erased any optimism earlier, when pharmaceutical firms Pfizer and BioNTech said three doses of their Covid-19 vaccine had been found to neutralise the Omicron variant of Covid-19.

Two doses of the vaccine, on the other hand, saw a "significant" reduction in neutralisation titers, the two companies said.

Giving a third dose of the vaccine, known as BNT162b2, generated a 25-fold increase in neutralising antibodies against Omicron when compared to just two doses.

"Titers after the booster dose are comparable to titers observed after two doses against the wild-type virus which are associated with high levels of protection," the companies added.

In equities, the travel sector was in focus on the Omicron news with engine maker Rolls-Royce down 2.4% and easyJet 0.72% lower.

Leisure and hospitality stocks also suffered, with Cineworld down 2.57% Restaurant Group losing 2.36% and JD Wetherspoon off 1.66%.

Elsewhere, miniature wargames manufacturer Games Workshop slipped 0.72% after reporting that pre-tax profits had slipped in the six months ended 28 November, despite sales moderately improving.

The Warhammer maker now expected interim sales to be at least £190m, up from £186.8m at the same time a year ago, while pre-tax profits were set to fall to around £86m from £91.6m.

On the upside, Berkeley Group rallied 2.35% after it increased its guidance for the current year and beyond as the housebuilder reported a 26% increase in first-half profit fuelled by its investment in London and surrounding areas.

Peers in the housebuilding sector were also on the front foot, with Persimmon up 1.28% and Barratt Developments gaining 1.23%.

Man Group pushed 2.59% higher after saying it would buy back up to $250m of shares to return cash to shareholders.

Upper Crust and Ritazza owner SSP advanced 2.74% after it reported a widening of its full-year losses as it took a hit from Covid restrictions, but said revenue trends had started to improve over the summer and autumn.

Travel operator TUI reversed earlier losses to close up 1.75%, even after it lowered winter capacity plans due to the emergence of Omicron while reporting its first quarterly profit since the start of the pandemic.

The company said capacity would "likely" be modified towards the lower end of winter plans of between 60% and 80%.

Other travel stocks joined TUI in recovering from negative trajectories earlier, with British Airways owner IAG up 0.46%, Premier Inn owner Whitbread eking out gains of 0.07%, and low-cost carrier Wizz Air climbing 0.36%.

Diversified Energy gained 2.75% after saying it had enlarged its credit facility borrowing base.

The company's bank lending group, led by KeyBank National Association, completed its semi-annual redetermination of the senior secured credit facility and approved an $825m borrowing base.

That represented a $200m, or 32%, increase related to higher commodity prices and the added collateral from the acquisition of Tapstone Energy.

In broker note action, Croda was boosted 2.24% by an upgrade to 'buy' from 'neutral' at UBS.

Market Movers

FTSE 100 (UKX) 7,337.35 -0.03% FTSE 250 (MCX) 23,229.88 -0.04% techMARK (TASX) 4,468.67 0.01%

FTSE 100 - Risers

Berkeley Group Holdings (The) (BKG) 4,779.00p 3.11% Admiral Group (ADM) 3,097.00p 2.52% Croda International (CRDA) 10,285.00p 2.24% Flutter Entertainment (CDI) (FLTR) 11,280.00p 2.17% Informa (INF) 506.40p 1.91% St James's Place (STJ) 1,604.50p 1.39% Persimmon (PSN) 2,855.00p 1.28% Barratt Developments (BDEV) 741.00p 1.23% Vodafone Group (VOD) 113.10p 1.09% Hargreaves Lansdown (HL.) 1,331.00p 1.06%

FTSE 100 - Fallers

Darktrace (DARK) 408.00p -4.90% 3i Group (III) 1,401.00p -3.65% DCC (CDI) (DCC) 5,638.00p -3.16% Smith & Nephew (SN.) 1,252.50p -2.15% Rolls-Royce Holdings (RR.) 129.24p -1.94% Aveva Group (AVV) 3,314.00p -1.69% Rio Tinto (RIO) 4,738.50p -1.55% Standard Chartered (STAN) 432.70p -1.41% BHP Group (BHP) 2,146.50p -1.24% Royal Mail (RMG) 487.30p -1.24%

FTSE 250 - Risers

Reach (RCH) 283.00p 6.79% TI Fluid Systems (TIFS) 249.00p 4.18% Carnival (CCL) 1,340.00p 3.96% Diversified Energy Company (DEC) 105.20p 3.34% SSP Group (SSPG) 240.60p 3.17% Rank Group (RNK) 144.80p 2.70% Savills (SVS) 1,401.00p 2.64% Victrex plc (VCT) 2,486.00p 2.47% Man Group (EMG) 221.00p 2.41% CLS Holdings (CLI) 218.00p 2.35%

FTSE 250 - Fallers

Syncona Limited NPV (SYNC) 197.20p -7.85% Baltic Classifieds Group (BCG) 202.00p -7.76% Auction Technology Group (ATG) 1,408.00p -4.99% Bridgepoint Group (Reg S) (BPT) 482.00p -4.55% FirstGroup (FGP) 101.50p -3.97% Network International Holdings (NETW) 285.00p -3.39% PureTech Health (PRTC) 278.00p -3.30% National Express Group (NEX) 233.00p -3.16% C&C Group (CDI) (CCR) 232.40p -2.76% Kainos Group (KNOS) 1,818.00p -2.73%
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