FTSE 100 Live: Businesses welcome Rishi Sunak’s £1bn of Omicron support, stocks bounce back

·16-min read
 (ESI)
(ESI)

The FTSE 100 index has made a swift recovery from Monday’s turbulence as sentiment continues to fluctuate in response to developments in the pandemic.

The rally for Asia and European stocks came as it emerged that UK government borrowing stood at £17.4 billion, down £4.9 billion on last year but still the second highest November figure since monthly records began in 1993.

Public sector net debt was £2.3 trillion, representing around 96.1% of GDP and the highest ratio since March 1963 when it was 98.3%.

FTSE 100 Live Tuesday

Santa mini-rally sees shares bounce back

Tuesday 21 December 2021 16:15 , Simon English

The arrival of Omicron seemed to remove any hope of a Santa rally for shares in the run up to Christmas.

Markets got whacked on Monday as investors feared the worst.

But there’s a decent bounce back underway just at the moment as signs of optimism that the holidays at least won’t be cancelled emerged.

The FTSE 100 is now up 95 points to 7293.

BA owner IAG is the biggest riser, up 5% to 138p.

In New York the Dow Jones is up 405 points to 35,337. Europe markets were all also up, recovering most if not all of Monday’s losses.

“Like a dud cracker on Xmas day,” not everyone loves the support measures

Tuesday 21 December 2021 16:02 , Simon English

Reaction to the latest Covid rescue packages from Chancellor Rishi Sunak keeps rolling in.

Pubs groups seem mostly pleased.

The British Beer & Pub Association’s chief executive, Emma McClarkin, said: “This short-term package of support from the chancellor is welcome at this extremely challenging time for pubs and brewers.

“It will be a vital lifeline for many and will help compensate businesses for the dramatically reduced trade already being experienced in the run-up to Christmas.”

Hotel groups are less so, with the boss of one chain describing it as like a “dud cracker on Christmas Day”.

Best Western GB chief executive Tim Rumney said: ““It doesn’t go deep enough and it’s too little, too late.”

‘The Government will need to keep support measures under review'

Tuesday 21 December 2021 14:02 , Oscar Williams-Grut

London First Managing Director (Policy) Muniya Barua says: “It is good to see the Chancellor now taking action to support businesses in leisure and hospitality, which have been hit by a tsunami of cancellations just as they were getting back on their feet.

“Additional grants will provide an immediate cash injection to hard-pressed firms in the capital and covering the cost of sick pay is welcome.

“The Government will need to keep support measures under review should the situation worsen, particularly given the crucial role London will play in acceleration the UK’s recovery.”

Read more on the reaction from business here.

FSB: Support will 'help alleviate the intense pressures’

Tuesday 21 December 2021 13:43 , Oscar Williams-Grut

The Federation of Small Businesses has joined the chorus of groups welcoming Rishi Sunak’s new Omicron support measures for hospitality and leisure firms.

Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “These positive measures will help alleviate the intense pressures that small firms are currently under, and hopefully arrest a significant decline in confidence over this year.

“With the prospect of one million people sick or self-isolating by January, we encouraged the Chancellor to bring back the COVID statutory sick pay rebate – we’re pleased to see our recommendation taken forward today.

“This move will reduce stress for small employers up and down the country, helping those who are struggling most with depleted cashflow. It’s vital that small firms – once again up against a massively disrupted festive season – can reclaim the costs of supporting staff.

“We’ve always said that support needs to move in lockstep with restrictions, and this intervention will help give small businesses confidence that this is the approach Government will be taking.”

CBI: Government support provides ‘welcome breathing space’

Tuesday 21 December 2021 13:30 , Oscar Williams-Grut

The Confederation of British Industry has welcomed the Chancellor’s new support package for hospitality and leisure businesses.

Rain Newton-Smith, CBI chief economist, said: “The Chancellor has provided welcome breathing space to boost confidence and provide support for hospitality and leisure businesses to keep their doors open through tough disruption to their crucial winter trading.

“The latest targeted package offers a fair variety of support to help keep businesses open, with new central grants, flexibility on time to pay and sick pay support for SMEs. All this and more will help keep the economy open as we learn to live with the virus.

“That said, the international travel and tourism sector remains disappointingly out of scope despite the heavy toll it has taken for many months and its vital role in enabling international trade and supporting jobs.”

Hospitality chiefs welcome emergency support package - but caution more help may be needed

Tuesday 21 December 2021 13:24 , Naomi Ackerman

Hospitality and leisure industry leaders have welcomed the Chancellor's newly-announced £1 billion emergency support package, but have cautioned more help may be needed.

Rishi Sunak today unveiled measures to assist consumer-facing businesses hit hardest by the pre-Christmas collapse in trade caused by the surge in Omicron.

Eligible businesses will be able to apply for one-off grants of up to £6,000 per premises as part of a package of support which also includes more money to help smaller firms cover the costs of statutory sick pay.

Business leaders had been clamouring for Government support over the past week, after Plan B's work from home order and wariness over catching the highly-transmissable variant before Christmas saw bookings devasted in two of the sector's crucial trading weeks of the year.

Many central London pubs, restaurants and gyms had already closed early.

Hospitality businesses in the area had seen a 70% drop in revenues — double the levels in the rest of the country.

Kate Nicholls, CEO of trade body UK Hospitality, said the package is "generous" and will "help to secure jobs and business viability in the short term, particularly among small businesses in the sector".

Supply chain businesses will be key beneficiaries, she said.

Emma McClarkin, CEO of the British Beer and Pub Association, said the support package will be "a vital lifeline for many".

But she cautioned: “It will be absolutely essential that the Government continues to monitor and support our sector for the long-term as we ride out the pandemic and into recovery.

"Ensuring our pubs and brewers continue to have the support they need, including further financial support if further restrictions are introduced, along with a clear timeline for the lifting any such measures."

Shevaun Haviland, director general of the British Chambers of Commerce, said the grants must reach businesses quickly. (There were widespread reports that support grants were slow to reach business owners in the January lockdown last year, as cash sat with local councils for long periods).

Haviland said: “Whilst these measures are a positive starting point, if restrictions persist or are tightened further, then we would need to see a wider support package, equal to the scale of any new measures, put in place."

Business groups are also asking for longer term measures such as extending the 12.5% VAT rate for hospitality beyond next April, business rates relief, a moratorium on evictions, and the reintroduction of a flexi-furlough scheme.

Sunak unveils support package for hospitality and leisure

Tuesday 21 December 2021 13:08 , Oscar Williams-Grut

Chancellor Rishi Sunak has announced a £1 billion emergency support package for hospitality and leisure businesses hit hardest by the pre-Christmas collapse in trade caused by the surge in Omicron.

Eligible businesses will be able to apply for one-off grants of up to £6,000 per premises as part of a package of support which also includes more money to help smaller firms cover the costs of statutory sick pay.

Read the full story.

Support package for hospitality sector announced

Tuesday 21 December 2021 13:05 , Joanna Bourke

Chancellor Rishi Sunak (Stefan Rousseau/PA) (PA Wire)
Chancellor Rishi Sunak (Stefan Rousseau/PA) (PA Wire)

Chancellor Rishi Sunak has announced a £1 billion emergency support package for hospitality and leisure businesses hit hardest by the pre-Christmas collapse in trade caused by the surge in Omicron.

Eligible businesses will be able to apply for one-off grants of up to £6,000 per premises as part of a package of support which also includes more money to help smaller firms cover the costs of statutory sick pay.

Read more HERE.

Energy price cap set to reach £2,000 next year

Tuesday 21 December 2021 11:30 , Oscar Williams-Grut

Energy industry experts are warning that the UK’s domestic price cap could soar to £2,000 next year as wholesale gas prices remain elevated.

Martin Young, an analyst at Investec, and energy consultancy Cornwall Insights both warned that domestic bill could shoot above £2,000 unless the government intervened to manage high wholesale prices.

Young said in a note sent to clients on Monday that, based on current prices, the domestic price cap for next summer could rise to £2,000 when it announced next February. That would mark a huge 56% jump from the current maximum tariff of £1.277.

Read the full story.

UK borrowing higher than expected in November

Tuesday 21 December 2021 11:11 , Oscar Williams-Grut

Government borrowing levels fell in November but City economists are fearful that it may surge again if new Covid restrictions are ordered.

The latest figures from the ONS show the government borrowed £17.4 billion last month. While that is the second highest amount for that month on record, it is down £4.9 billion on a year ago.

But it was higher than the £16 billion forecast by a Reuters poll of economists.

The recent rise in interest rates by the Bank of England adds £4 billion a year to the cost of servicing this debt.

Richard Carter, head of fixed interest research at Quilter Cheviot, said: “We know there could well be an Omicron-shaped black hole in the public finances, we just don’t yet know how big it could be. The Chancellor has so far declined to offer any additional financial support to businesses, despite the advice to avoid as much social contact as possible. This will have to change if further restrictions are introduced, particularly if the new restrictions take the form of a fire-break lockdown.

Read the full story.

JD Sports leads FTSE 100 recovery

Tuesday 21 December 2021 10:31 , Graeme Evans

JD Sports Fashion shares set a blistering pace today as investors in a rejuvenated London market cheered the read-across from Nike's Wall Street beating earnings update.

The blue-chip stock rallied 4% in a session when sentiment showed a big improvement after Monday's pounding for global stocks caused by fears over tighter Covid restrictions.

London's top flight lost 1% of its value yesterday, with Wall Street further impacted after Democrat senator Joe Manchin said he could not support President Biden's new $1.9 trillion Build Back Better infrastructure bill.

Today's turnaround came as Moderna said that a booster shot of its vaccine appeared to protect against the Omicron variant. There was also some relief that Boris Johnson had moved away from the possibility of pre-Christmas curbs to control the virus spread.

This provided a boost to retail stocks as shares in Primark owner Associated British Foods rose more than 2% or 48.5p to 1960.5p and Next lifted 142p to 7920p.

The biggest gain came from JD Sports Fashion as it rallied 7.8p to 207p after Nike's better-than-expected second quarter update offered signs that US sportswear giant has moved on from recent supply chain-related challenges.

Nike shares rose 3% in after-hours trading on Wall Street as it stuck by full-year guidance and said quarterly sales jumped by 12% in its biggest market of North America. JD Sports started life with one store in Bury in 1981 but now generates about 30% of its sales from the United States.

The FTSE 100 index rose 0.9% or 63.43 points to 7261.46 as investors sensed the opportunity for some pre-Christmas bargains following yesterday's sell-off.

Beneficiaries included British Airways owner IAG, up 2% or 2.62p to 133.6p. There was also huge support for the housebuilding sector as heavyweights Barratt Developments, Berkeley and Taylor Wimpey all saw gains of more than 3%.

A shortened fallers board featured veterinary services business Dechra Pharmaceuticals, which fell 70p to 5020p on its second day of trading in the FTSE 100.

In a quiet session for updates, Schroders rose 75p higher to 3450p after it confirmed a deal to buy a 75% shareholding in renewables fund manager Greencoat Capital for £358 million.

London's recovery extended to the FTSE 250 index, which cheered more than 1% or 257.01 points to 22,806.89 amid a recovery for pandemic-hit stocks including WH Smith and easyJet. Tour operator rose TUI rose 7.1p to 221.3p, despite broker Peel Hunt initiating coverage with a “hold” recommendation and 210p price target.

Music company ATC Group hits right notes on Aquis debut

Tuesday 21 December 2021 09:59 , Naomi Ackerman

Music company ATC Group, which represents stars including Nick Cave and Smiths guitarist Johnny Marr, hit the right notes on its debut on the Aquis Stock Exchange this morning.

The London-headquartered firm, aka All Things Considered Management, listed under the ticker ATC at 153p per share. Its stock was up at 155.5p by mid-morning.

The company raised £4.15 million in the listing, implying a market cap of £14.7 million. Cash will be used to invest in growth.

Its lockdown launch, livestream gig production arm Driift, was behind the 2021 Glastonbury streaming event foiled by an IT glitch.

Driift has raised cash to support musicians, selling over 500,000 tickets to virtual gigs with stars including Kylie Minogue and Niall Horan.

Read more here

River & Mercantile extends bid deadline

Tuesday 21 December 2021 09:42 , Oscar Williams-Grut

The takeover battle for asset manager River & Mercantile has been extended into the new year.

River & Mercantile, which is being pursued by both AssetCo and Premier Miton, today extended the deadline for a firm bid until 18 January. Talks with both suitors “remain ongoing.”

AssetCo, the vehicle chairs by Martin Gilbert, said it “continues to believe” that a tie-up would be “highly complementary” and “create significant value”.

CEO Campbell Fleming said: "River and Mercantile has great potential as an active equity and infrastructure investment manager with people, clients and product offering that would complement our existing businesses.”

River & Mercantile said there was no certainty of a bid from either AssetCo or Premier Miton.

GSK gets US approval for Apretude

Tuesday 21 December 2021 09:22 , Graeme Evans

GlaxoSmithKline's joint venture dedicated to HIV medicines and research was today boosted by US regulatory approval for Apretude, a long-acting injectable option for HIV prevention.

The support of the US Food and Drug Administration is a significant milestone for ViiV Healthcare, which is majority owned by GSK and backed by Pfizer and Shionogi.

GSK said Apretude's two-month dosing showed superior efficacy to the current daily oral option in reducing the risk of HIV acquisition.

The US market is worth approximately £1.5 billion, but Glaxo said recently this is expected to more than double over the next decade to £4-5 billion.

Shares in GSK, which is in the process of demerging its consumer health division, rose 7.6p to 1599.4p.

Square Mile office development approvals leap

Tuesday 21 December 2021 08:57 , Joanna Bourke

The amount of City office floorspace in new developments that got the green light during this year has surged, new data shows.

The City of London Corporation said in 2021 its planning and transportation committee resolved to approve a total of 4.4 million square feet of new office floorspace. That compares with 2.6 million square feet in in the prior 12 months.

The figures, which show some developer confidence in post-pandemic offices, look at gross floorspace and do not take into account any existing office floorspace within developments or any floorspace which will be utilised for other uses.

Read more HERE.

JD Sports Fashion leads FTSE 100 recovery

Tuesday 21 December 2021 08:24 , Graeme Evans

The FTSE 100 index has rebounded 0.9% to 7264, with Rio Tinto and Anglo American at the forefront of the recovery after their shares improved by more than 2%.

JD Sports Fashion lifted 4% and Primark owner Associated British Foods was up 3% in a better session for the retail sector. Rolls-Royce recovered 2.7p to 113.22p and British Airways owner IAG added 2.1p to 133.1p.

The FTSE 250 index was 0.85% higher at 22,740.6, led by gains of up to 3% for re-opening stocks including WH Smith, Cineworld and low-cost airline easyJet.

BHP unification plan gets regulatory support

Tuesday 21 December 2021 08:05 , Graeme Evans

Dual-listed mining giant BHP has moved a step closer to unifying its corporate structure under its existing Australian parent company.

BHP's primary listing will be on the Australian Securities Exchange, with the listing in London downgraded to a standard one. Based on current rules, a unified BHP would not qualify for inclusion in the FTSE 100 index.

BHP said today that all regulatory and competition approvals have now been received ahead of shareholder meetings planned for January 20. If approved, the unification is expected to complete on January 31.

Sentiment recovers after Monday’s slide

Tuesday 21 December 2021 07:37 , Graeme Evans

Global stocks have rallied after falling sharply on Monday due to fears over the need for tighter restrictions to deal with the Omiron variant.

The improvement in risk sentiment helped the Tokyo's Nikkei 225 to jump 2%, while CMC Markets is forecasting a 82 points gain for the FTSE 100 index to 7280.

London's top flight lost 1% of its value yesterday, while Wall Street markets fell by a similar level after Democratic Senator Joe Manchin said he could not support President Biden's new $1.9 trillion Build Back Better infrastructure bill.

Stocks including Tesla and Rivian Automotive fell sharply but futures trading in the US is pointing to a recovery later today.

CMC's Michael Hewson said: “In a sign of how fickle sentiment is, we’re expecting to see a positive open as the ebb and flow continues.

“While concerns around Omicron remains very real the prospect of new restrictions being implemented this side of Christmas has receded somewhat.”

Oil prices also reflect the improved sentiment as Brent crude futures stood at just above $72 a barrel, representing a 1% rise today.

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