ADVFN Morning London Market Report: Tuesday 30 November 2021

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London open: Stocks slide as Moderna boss casts doubt over vaccines


London stocks slid in early trade on Tuesday after the boss of Moderna cast doubt on the efficacy of vaccines on the Omicron Covid variant.

At 0840 GMT, the FTSE 100 was down 1% at 7,036.98.

Sentiment took a hit after Moderna chief executive Stephane Bancel told the Financial Times that existing vaccines will struggle with the Omicron variant and warned that it could take months for pharmaceutical companies to make enough jabs at a sufficient scale to make a difference.

CMC Markets analyst Michael Hewson said: “His tone contrasts with the likes of Pfizer and BioNTech who suggested any new vaccine would be able to modified fairly quickly. His rather candid comments have also seen oil prices slide back sharply, as an increasingly jittery market react with concern to the prospects of further restrictions and lower demand.

“As we look ahead to the rest of the week, this morning’s drop in markets shows that sentiment is set to remain extremely fickle until we get a clearer idea of what comes next when it comes to the new variant.

“As a result of these latest virus developments, markets are also dialling back expectations of when central banks might look to accelerate any normalisation measures. Expectations had been rising in recent days that the Federal Reserve might accelerate the pace of its tapering program when it meets in mid-December. This now appears to be up for grabs with markets looking to today’s testimony by Fed chair Jay Powell to US lawmakers to gather clues as to the central banks thinking on the likelihood of this happening.”

In equity markets, oil giants BP and Shell both gushed lower as oil prices fell.

Property group Shaftesbury retreated despite restoring its progressive dividend policy and reporting improving trends and a narrower annual loss, while Countryside Properties slumped after it revised down its targets for FY22.

On the upside, budget airline easyJet flew higher after it reported a better-than-expected annual loss and said it expected capacity to return to pre-pandemic levels by the end of the current fiscal year.

The company posted a headline pre-tax loss of £1.13bn, compared with an £835m loss a year earlier and guidance of £1.14bn – 1.18bn. It also noted an increase in transfers and softer trading in the current quarter due to the outbreak of the new Omicron Covid variant.

Media group Future surged after saying it now anticipates adjusted results for FY22 to be “materially above” current expectations.


Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 Ocado Group Plc +0.76% +14.00 1,848.00
2 Evraz Plc +0.66% +3.80 575.80
3 Aviva Plc +0.26% +1.00 379.20
4 Fresnillo Plc +0.24% +2.20 916.60
5 Rightmove Plc +0.16% +1.20 741.20
6 Auto Trader Group Plc +0.14% +1.00 733.40
7 Scottish Mortgage Investment Trust Plc +0.10% +1.50 1,513.00
8 Anglo American Plc +0.07% +2.00 2,685.50
9 Sage Group Plc +0.03% +0.20 777.20
10 Morrison (wm) Supermarkets Plc +0.00% +0.00 286.40


Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Intercontinental Hotels Group Plc -2.87% -132.00 4,468.00
2 Sainsbury (j) Plc -2.66% -7.70 282.00
3 Dcc Plc -2.34% -132.00 5,502.00
4 Burberry Group Plc -2.17% -39.00 1,756.00
5 Land Securities Group Plc -2.16% -16.20 734.80
6 Bt Group Plc -2.14% -3.50 159.90
7 Lloyds Banking Group Plc -2.10% -0.98 45.82
8 Schroders Plc -2.08% -73.00 3,444.00
9 Itv Plc -2.02% -2.25 108.95
10 British Land Company Plc -1.99% -10.40 511.00


Europe open: Shares slump on fears of vaccine efficiency vs Omicron

European shares slumped at the opening after the head of drug company Moderna said existing Covid vaccines may struggle to combat the Omicron variant of the virus.

The pan-European Stoxx 600 index fell 1.1% in early deals with all major regional bourses on the same path.

Moderna chief executive Stephane Bancel warned it would take months for pharmaceutical companies to make enough jabs at a sufficient scale to make a difference to the new variant.

Bancel told the Financial Times the high number of Omicron mutations on the spike protein, which the virus uses to infect human cells, and the rapid spread of the variant in South Africa, suggested the current crop of vaccines may need to be modified next year.

“There is no world, I think, where [the effectiveness] is the same level . . . we had with Delta,” Bancel said.

“I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to . . . are like ‘this is not going to be good’.”

The remarks place Bancel at odds with rivals who have said a new vaccine would be able to modified quickly.

Brent crude fell 2.8% to $71.40 per barrel, an 11-week low after plunging more than 10% on Friday, when concerns about Omicron emerged from Southern Africa.

In equity news, shares in Swedish oil and gas company Lundin Energy fell 9% on a report that it was considering a potential sale.

Future lifted its 2022 expectations, sending shares in the media group surging.


US close: Stocks regain some of Friday’s omicron-fuelled losses

Wall Street stocks closed higher on Monday following Friday’s omicron variant-fuelled selloff.

At the close, the Dow Jones Industrial Average was up 0.68% at 35,135.94, while the S&P 500 was 1.32% firmer at 4,655.27 and the Nasdaq Composite saw out the session 1.88% stronger at 15,782.83.

The Dow closed 236.60 points higher on Monday, reclaiming a small amount of losses suffered at the end of last week as traders returned from the Thanksgiving Day break to concerns regarding a new and virulent strain of Covid-19 found in South Africa.

Market participants still monitored developments around the new “variant of concern” on Monday, with preliminary evidence suggesting omicron comes with an increased risk of reinfection, according to the World Health Organization.

While the variant was initially reported to be centralised to South Africa, it has now been found in the UK, Israel, Belgium, the Netherlands, Germany, Italy, Australia and Hong Kong. No cases have been detected in the US as of yet.

Travel stocks, which took a beating on Monday, were in the green at the end of the day, with CarnivalNorwegianAmericanDeltaUnited and Booking Holdings all trading higher, while bank stocks were also higher after the yield on the benchmark 10-year Treasury note rose to 1.500%.

On the macro front, signed contracts on existing homes, also known as pending sales, jumped 7.5% month-on-month in October, according to the National Association of Realtors. While sales were still 1.4% lower when compared to the same time a year ago, it is worth noting that October 2020 marked a cyclical high for the US housing market. Sales were strongest in the Midwest and the South, rising 11.8% and 8.0% month-on-month, respectively.

Elsewhere, Federal Reserve chairman Jerome Powell said he expects to see inflation continue to ease over the next twelve months as both supply and demand levels balance out. However, the central bank head also cautioned that prices may rise longer than initially thought.

“It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year,” Powell said. “In addition, with the rapid improvement in the labour market, slack is diminishing, and wages are rising at a brisk pace.”


Tuesday newspaper round-up: Clearview AI, Virgin Atlantic, Accenture, BT

Volumes of goods shipped directly from Ireland to the EU on new Brexit-busting ferry routes have rocketed by 50% in the past six months as exporters seek to avoid travelling across land through Great Britain, according to official data. Figures published by the Irish Maritime Development Office (IMDO) show significant traffic diverted away from the traditional routes between Dublin and Britain to some of 32 new ferry services direct to ports such as Le Havre, Cherbourg and Dunkirk in France and Zeebrugge in Belgium. – Guardian

US company that gathered photos of people from Facebook and other social media sites for use in facial recognition by its clients is facing a £17m fine after the Information Commissioner’s Office found it had committed “serious breaches” of data protection law. Clearview AI, which describes itself as the “world’s largest facial network”, allows its customers to compare facial data against a database of over 10bn images harvested from the internet. – Guardian

An effort by Virgin Atlantic to raise £400m in rescue funding has been thrown into doubt by fears of new travel curbs, raising concerns among industry observers about its prospects over winter. Sir Richard Branson’s airline has been in talks with existing shareholders and lenders over a cash lifeline in recent weeks, after extended restrictions on travel from the UK to the United States forced it to shelve plans for a public listing. – Telegraph

Accenture will create 3,000 new jobs in the UK over the next three years as part of a push into technology services, with half of the roles to be based outside London. The professional services firm said the new jobs are being driven by increased client demand for services in cybersecurity, cloud engineering, data, intelligent operations and platforms. – Telegraph

The government is monitoring the situation at BT amid heightened takeover speculation surrounding Britain’s biggest telecoms group. Uncertainty intensified yesterday after a report that Reliance Industries, the Indian oil-to-telecoms conglomerate controlled by Mukesh Ambani, India’s richest businessman, was weighing a takeover bid. – The Times

Babcock International has been accused of failings in its provision of crucial training to firefighters before the Grenfell Tower fire. The inquiry into the 2017 disaster, which killed 72 people, heard last week that the outsourcing group had been more than two years late in completing a review of training for incident commanders at the time of the blaze. – The Times


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