FTSE 100 Live 05 January: London shares new year performance, tech stocks fall rising bond yields, airline leisure shares, OPEC oil meeting

    T

    he 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.

    Live updates

    1641376795

    Playtech delays takeover vote

    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 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.

    1641373625

    Stocks ‘consolidate’

    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.”

    1641372176

    Airline stocks consolidate new year gains

    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.

    1641370808

    Oil prices firm after OPEC+ meeting

    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.

    1641370282

    Supermarkets enjoy good Christmas

    Fresh data just out from market research business Kantar suggests supermarkets enjoyed a good festive season this year.

    Visits to supermarkets returned to their highest level since March 2020 over Christmas as Brits eased off online shopping. Christmas grocery sales remained strong even as prices soared.

    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.

    1641370902

    Tech stocks under pressure

    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.

    1641368276

    FTSE 100 loses new year fizz

    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.

    Main Source link