Omicron hopes boost stocks, Ryanair doubles loss forecast, Paddy Power-owner strikes Italy deal
Ryanair is to cut its January schedule by a third as the low-cost carrier last night revealed the major financial impact of travel restrictions to deal with the Omicron variant.
With Christmas demand severely weakened by last weekend’s ban on UK arrivals into France and Germany, Ryanair more than doubled its annual loss forecast to as much as 450 million euros (£382 million). It has also been hit by the suspension of EU flights to Morocco.
Despite the new guidance, re-opening stocks and airlines including easyJet rallied sharply in London today after encouraging data on the severity of the Omicron variant boosted hopes the world can avoid more lockdowns.
FTSE 100 Live Thursday
IAG, Rolls-Royce shares jump on Omicron hopes
Ryanair doubles loss forecast
New car production lowest since 1984
Paddy Power-owner Flutter strikes Italy deal
Late rally boosts FTSE
16:47 , Oscar Williams-Grut
The FTSE 100 has ended the day at its highest level all session. The bluechip index has closed up 40 points, or 0.55%, at 7382.
The leaders board looks much the same as it has all day: Rolls-Royce has eclipsed IAG to end the day at the top of the FTSE, but IAG isn’t far behind. Paddy Power-owner Flutter is near the top after striking a £1.6 billion deal in Europe’s second biggest gambling market, Italy.
At the other end of the index, drug makers like Dechra Pharmaceutical and Hikma are on the slide, likely as investors reason that Omicron’s apparent lack of severity will mean lower demand for medicines across the board.
That’s all from us on the blog today and for this year. We are taking a Christmas break and will be back on 4 January. Merry Christmas all.
Higher open on Wall Street
14:42 , Oscar Williams-Grut
Markets have opened solidly in the green in New York this afternoon. The Dow is the best performer, up around 0.6% just after the open, while the worst is the Nasdaq, still up a respectable 0.3%.
The story on this side of the Atlantic remains much the same as it has been all day. IAG is back at the top of the index while Rolls-Royce, EasyJet, Wizz Air, IHG and other are all also making gains thanks to hopes that Omicron may not wreck travel plans after all.
The FTSE 100 has ticked higher since lunchtime and is currently up 20 points, or 0.27%, at 7361.
HSBC buys Indian wealth manager
14:36 , Oscar Williams-Grut
HSBC has announced a deal to buy Indian wealth manager L&T Investment Management for $425 million.
HSBC said the deal would help it achieve its ambitions to build out its wealth management franchise in the broader Asia region. L&T is the 12th biggest wealth manager in India, with just over $10 billion in assets managed on behalf of 2.4 million clients.
CEO Noel Quinn said: “This transaction enhances the strength of our business in India and reinforces our status as one of Asia’s leading wealth managers.
“Combining LTIM with our existing Indian asset management business gives us the scale, reach and capabilities to capture some of the 15-20% annual asset management market growth expected in India over the next five years . It also boosts our ability to serve India’s growing wealth needs, along with those of the 18 million non-resident Indians around the world.
“Together with our recent announcement to acquire AXA Singapore, this demonstrates our commitment to capturing the Asia wealth opportunity. We will continue to invest significantly to achieve that goal.”
Surendra Rosha, HSBC’s Co-Chief Executive Asia Pacific, said: “LTIM’s customer base and wide footprint in India will provide HSBC with much deeper access to a high-growth wealth management market. India’s rising income levels and higher life expectancy are driving an expanding and yet under-penetrated sector.”
The deal will be funded out of HSBC’s existing assets and is expected to immediately add value. HSBC shares are up about half a percent, little changed on the announcement.
Paddy Power owner rises on Italy deal
13:48 , Oscar Williams-Grut
Flutter, the gambling giant behind Paddy Power, is on the up after striking a major deal in Italy.
Flutter is buying Sisal, an online poker and lottery operator, for €1.91 billion (£1.6 billion) from private equity group CVC. The Milan headquartered business operates lotteries in Turkey and Morocco alongside online poker operations. Flutter said the deal will help it capitalise on the shift to online gambling in Italy, Europe’s second biggest betting market.
Peter Jackson, Flutter CEO said: “For some time we have wanted to pursue this market opportunity via an omni-channel strategy and this acquisition will ideally position us to do so.
“Sisal has grown its online presence significantly in recent years, aided by its proprietary platform and commitment to innovation. I’m excited to see how Flutter can complement these capabilities through our scale, differentiated products and operational capabilities. We look forward to welcoming Francesco and the rest of the Sisal team to Flutter in 2022.”
Francesco Durante, Sisal CEO, said: “We are delighted to join Flutter and are convinced that through its scale and operational capabilities, we will be able to further strengthen our leadership in the markets we operate in. I look forward to working with Peter and the team on the next chapter of Sisal history.”
Shares in Flutter are up 325p, or 2.8%, to 11630p and have eclipsed IAG at the top of the FTSE.
FTSE mildly positive in lunchtime trade
12:53 , Oscar Williams-Grut
The FTSE 100 has major Christmas eve, eve vibes in lunchtime trade. The bluechip index is up 10 points, or 0.1%, at 7352.
British Airways-owner IAG continues to top the index on the hopes that Omicron won’t turn out to be as severe as hoped and therefore won’t have as devastating impact on the travel industry as initially thought. Engine maker Rolls-Royce is just behind on the leaders board.
EasyJet and Wizz Air are both up 4.3% on the FTSE 250 driven by the same logic.
Pret sees City sales slump nearly 30% in single week as Omicron curbs hit
12:07 , Naomi Ackerman
Pret, the coffee chain viewed as a pandemic bellwether, saw transaction levels at its City and Canary Wharf stores slump by nearly 30% in a single week as Omicron restrictions came into force.
In a bid to combat the spread of the highly-contagious variant, the Government implemented Plan B – including compulsory wearing of facemasks – on December 10. “Work from home if you can” guidance came in on December 13.
Data released today revealed till transaction volumes at Pret’s cafes catering to City workers fell 29% between the week ending December 9 and the week ending December 16, to just 52% of January 2020 levels.
This was the lowest level of trading in London City stores since the week ending September 2 – a week spanning the August Bank Holiday, over which many City workers take holiday.
Read the full piece here
Aquis-listed CBD brand Love Hemp launches London tie-up with Deliveroo
11:50 , Naomi Ackerman
Love Hemp, the CBD brand backed by Anthony Joshua, has partnered with Deliveroo to launch a trial tie-up in South London.
From today, people living within a six kilometer radius of the company‘s site in Croydon will be able to order any of Love Hemp’s oils and other offerings on the delivery app.
If the trial proves successful, Love Hemp will be offered on Deliveroo nationwide next year, the brand said.
Love Hemp has reported seeing surging sales this year amid growing interest in the sector, and is preparing a move to London’s main market.
Read the full story here
Third Point chair resigns amid activist pressure
11:03 , Oscar Williams-Grut
New York hedge fund boss Dan Loeb has attacked the activist investors targeting his London-listed investment vehicle, calling them a “stain” on the City engaged in “juvenile antics.”
The strong comments come after Third Point’s UK chair Steve Bates resigned from the board, citing pressure from activists.
Third Point Investors, Loeb’s London listed vehicle, said Bates resigned on Wednesday after pressure in private meetings with Asset Value Investors (AVI) and Staude Capital.
Third Point said: “One of the activists resorted to making personal threats against Steve Bates, namely that should he refuse to accede to their proposals, they would attack him in other business areas. This naturally raised a business conflict for Mr. Bates — if he continued as chair of TPIL, he would be subject to behaviour which would impede the carrying out of all his responsibilities and duties, including those he owes to the company.”
Bates said: “I very much regret having to leave the Board but have recently been put in a position where it is impossible for me to continue as a director of TPIL. I wish to thank my fellow board members, as well as the manager, for their collective efforts to strengthen the Company’s foundation and its value proposition for investors. I have no doubt these efforts will continue.”
Read the full story.
Dollar weakness boosts gold price
09:20 , Graeme Evans
Improving risk appetite has dampened demand for the safe haven of the US dollar, which retreated amid an improving outlook on Omicron.
The pound stood at 1.338 versus the US dollar, its best level in a month.
The dollar weakness helped boost precious metals, with gold trading above $1,800 an ounce for the first time since late November but still down on the $1,900 peak seen earlier in the year.
CT Automotive gets off to good start on AIM market
09:12 , Joanna Bourke
Shares in CT Automotive rose 12.2% as the manufacturer of interior components, such as dashboard panels and cup holders for brands including Bentley and Lamborghini, made its debut on London’s junior market.
The company raised £34 million from its IPO and floated at 147p per share.
In early trading Portsmouth-headquartered CT Automotive gained 18p to 165p.
Chairman Simon Phillips, who founded the business in 2000, said: “As one of the few trusted manufacturers of interior car parts for some of the world’s biggest automotive brands we have long-term agreements in place and are well placed to benefit as automotive production volumes recover.”
He added: “Our IPO enables us to invest further in the growth of the business, and we are excited by the opportunities ahead.”
November new car production at ‘lowest level since 1984’ as chip shortages bite, SMMT reveals
09:07 , Naomi Ackerman
UK car production fell to its lowest November level since 1984 last month amid an ongoing global semiconductor shortage, latest figures from the Society of Motor Manufacturers and Traders (SMMT) have revealed.
Production fell -28.7% to 75,756 units in November, the worst figure seen in 37 years, the trade body reported.
It marked the fifth consecutive month of output decline.
Global chip production has slowed amid supply chain and logistics issues over the past year, stymieing development and supply of new cars. Car manufacturing costs have also risen.
Read the full story here
Risk appetite returns to London market
08:51 , Graeme Evans
Re-opening stocks delivered the biggest gains on the London market as investors drew comfort from signs that Omicron is not as severe as the Delta variant.
The renewed appetite towards risk assets helped shares in easyJet and Wizz Air to rise by 3%, even though low-cost rival Ryanair last night forecast a much bigger full-year loss.
Other risers in the FTSE 250 index included WH Smith and pubs chain Mitchells & Butlers after their shares lifted 29.5p to 1464p and 5.2p to 243.8p respectively.
The FTSE 250 index rose 0.5% or 118.52 points to 23,199.61, better than the flat performance of the FTSE 100 index after the top flight’s international shares were dragged down by a four-week high for sterling versus the US dollar.
British Airways owner IAG led the blue-chip index with a rise of 5p to 145.92p, while Premier Inn owner Whitbread, InterContinental Hotels, Rolls-Royce, and GKN owner Melrose Industries all improved by 1.5% or more.
Paddy Power owner Flutter Entertainment, which has been one of this year’s worst performing stocks in the FTSE 100 index, rose 3% after it unveiled a £1.6 billion deal for Italian online gaming firm Sisal in a big lift for its European customer base.
New hire at recruitment group Robert Walters
08:28 , Joanna Bourke
Recruitment firm Robert Walters has appointed Micro Focus International’s finance chief as a non-executive director.
Matt Ashley has joined the board, and Robert Walters said he “brings a broad range of experience from different sectors”.
He has previously worked at companies including William Hill and National Express.
Ron Mobed, chairman of Robert Walters, said: “Matt’s considerable financial and listed business experience are a welcome addition to the board and I look forward to working closely with him.”
Ryanair increases loss forecast
08:12 , Graeme Evans
Ryanair’s update comes a week after boss Michael O’Leary said the UK government’s response to the Omicron variant has been shaped by “panic”.
He has now slashed the airline’s January traffic estimate from about 10 million to between six million and seven million.
The airline added last night: “In light of the current uncertainty about the Omicron variant, and intra Europe travel restrictions, no schedule cutbacks have yet been decided for February or March 2022.
“These schedules will be revisited in January as more scientific information becomes available on the Omicron variant, its impact on hospitalisations, European population and/or travel restrictions in February or March.”
It is now likely that Ryanair’s traffic forecast for the year to March 31 will be just under 100 million passengers and the expected net loss for the full year is likely to be within a new range of 250 million euros and 450 million euros (£212 million-£382 million).
US markets rally after strong GDP figure
07:46 , Graeme Evans
Better-than-expected data from the US economy and receding fears about the impact of the Omicron variant ensured financial markets rallied overnight.
The gains came after figures showed that the US economy expanded by 2.3% in the September quarter, compared with previous estimates for 2.1%.
Signs that Omicron is not as severe as the Delta version also helped push Brent crude futures over $75 a barrel. The improved market sentiment prompted investors to exit safe haven assets such as the US dollar, wth the pound standing at 1.33 versus the greenback.
Gold rallied in response to the weaker dollar, leaving the price above $1,800 an ounce.