Stocks and oil slump on Omicron fears, Dave Lewis joins GSK, StanChart fined, THG climbs
Shares are down sharply as the prospect of tighter Covid-19 restrictions over Christmas leads to more turbulence on European markets.
The rapid spread of the Omicron variant and its impact on the global economic outlook left the FTSE 100 index 2% lower and has also weighed on oil, with Brent crude trading more than 3% lower at just above $71 a barrel.
The main corporate developments involved FTSE 100 boardroom changes after mining giant Rio Tinto appointed Dominic Barton as its new chairman and GlaxoSmithKline named former Tesco boss Sir Dave Lewis as chair-designate of its consumer healthcare division.
FTSE 100 sinks, oil drops on Omicron fears
Sir Dave Lewis to chair GSK’s consumer business
Standard Chartered fined £46.5 million
THG rallies 15% as The Analyst withdraws short note
FTSE lower but pars back losses
13:49 , Oscar Williams-Grut
The FTSE 100 remains in the red in later lunchtime trade but has parred back some of its earlier losses. The index is currently down about 1.1%, compared to a loss of as much as 2% at its worst point this morning.
Victoria Scholar, head of investment at Interactive Investor, says: “Fears about new Omicron restrictions and below-average festive week volumes look set to drive a chopping week of trade ahead with little sign of a Santa rally so far. In fact, it looks as though he came and went already with the FTSE 100 rallying in the first week of December before retracing around 60% of those gains.”
Keywords Studios raises profit expectations as pandemic gaming boom continues
10:40 , Naomi Ackerman
Keywords Studios’ stock was up as much as 7% this morning after the gaming firm told investors full-year profits are set to come in ahead of consensus amid a “buoyant” video games market.
The AIM-listed company, which has worked on titles including Call of Duty: Modern Warfare and Star Wars Jedi: Fallen Order, said it expects to report adjusted pre-tax profits of at least €85 million (£72.6 million) for the year to December 31 – up 55% year-on-year.
The London-listed Irish firm said revenues are likely to be up at least 35% at €505 million.
Read the full update here
Spoons appoints pub staff to its board
10:34 , Naomi Ackerman
JD Wetherspoon has appointed four staff members to its board.
Managers were asked to apply for the positions after shareholders and employees both reported feeling the budget pub chain “would benefit from having more pub experience at board level”, the pubco said.
Regional managers Debbie Whittingham and Hudson Simmons were selected as employee directors with full director status, while fellow team leaders Will Fotheringham and Emma Gibson have been made associate employee directors.
All will hold the roles for three years.
Spoons chairman Tim Martin said having staff voices in board meetings will “help to preserve the culture of the company for the future”.
Read more here
THG makes gains at The Analyst pulls note
10:23 , Oscar Williams-Grut
Beleaguered e-commerce company THG was one of the few companies to make gains on the stock market as one of its most vocal critics pulled back.
Shares in THG, formerly The Hut Group, surged 28.5p, or 15%, to 218.5p after The Analyst, a private City research firm, withdrew its short recommendation. The same research house helped trigger the collapse in THG’s share price when it first published the report in October.
THG’s share price has sunk over 65% since September amid concerns about governance and transparency. CEO Matt Moulding has blamed short sellers for the firm’s woes.
On Friday analysts at Bank of America said THG’s stock looked “just too cheap” after the recent sell-off.
Rolls nuclear power scheme gets Qatar backing
10:07 , Graeme Evans
Plans by Rolls-Royce to develop small nuclear reactors in the UK were today boosted by £85 million of investment from Qatar’s sovereign wealth fund.
Boss Warren East said the government-backed Small Modular Reactor (SMR) business is now “set up to succeed” after Qatar took a 10% stake in the project.
Rolls expects each SMR power station will have the capacity to generate 470mw of low carbon energy, equivalent to more than 150 onshore wind turbines. They will provide consistent baseload generation for at least 60 years and help to support the roll out of renewable power.
East thinks the venture could create up to 40,000 UK jobs and have the potential to connect to the UK grid by the early 2030s
The project is being backed by £210 million of government investment.
Business secretary Kwasi Kwarteng said Qatar’s support was a clear vote of confidence in the UK’s global leadership in nuclear innovation.
He added: “It represents a huge step forward in our plan to deploy more home-grown, affordable clean energy – ensuring greater energy independence for the UK, highly skilled jobs and bringing cheaper, cleaner electricity to people’s homes.”
The Qatar Investment Authority join Rolls-Royce, BNF Resources and Exelon Generation as shareholders in Rolls-Royce SMR.
East said: “We have successfully raised the capital we need to establish Rolls-Royce SMR and it is encouraging to confirm that the business is now set up to succeed.”
Pub staff join JD Wetherspoon board
09:55 , Oscar Williams-Grut
JD Wetherspoon has appointed four pub staff members to its board.
Managers were asked to apply for the positions after shareholders and employees both reported feeling the company “would benefit from having more pub experience at board level”, the pubco said.
West Midlands regional manager Debbie Whittingham and Sheffield area manager Hudson Simmons were selected as employee directors with full plc director status, while Manchester regional manager Will Fotheringham and Exeter pub manager Emma Gibson have been made associate employee directors.
All will act as directors from today, and will remain in place for three years.
Read the full story.
Rio Tinto names new chairman
09:26 , Graeme Evans
Former McKinsey boss Dominic Barton has been named Rio Tinto’s next chairman as the iron ore mining giant continues the overhaul seen since the Juukan Gorge scandal.
Barton, who has been Canada’s ambassador to China since 2019, takes over in May after Simon Thompson said he would not stand for re-election at Rio’s AGM in 2022.
Outcry over the destruction of the sacred Aboriginal site in Western Australia has led to several boardroom departures, with chief executive Jean-Sebastien Jacques being replaced by Jakob Stausholm.
Barton, whose 30 years at management consultancy McKinsey included nine as global managing partner, said he looked forward to working with Stausholm on “building and sustaining trust with host communities”.
He added that decarbonisation would be at the heart of the business as the board positions Rio “to be a leader in addressing complex global problems”.
09:17 , Oscar Williams-Grut
Standard Chartered today became the latest major bank to land in trouble with watchdogs, getting a £46.5 million fine for reporting errors connected to the US dollar.
The Prudential Regulation Authority, overseen by the Bank of England, issued its biggest ever punishment for failures at Standard between March 2018 and May 2019.
The bank should have been more upfront about “additional liquidity expectations” due to market concerns about US dollar outflows.
Read more here.
Dave Lewis to chair GSK spin-out
08:59 , Oscar Williams-Grut
GlaxoSmithKline (GSK) has named former Tesco CEO Sir Dave Lewis as the chair of its new consumer business, which is set to be spun out next year.
GSK said Lewis would be named chair designate from 1 January. Earlier this year the pharmaceutical giant announced plans to spin off its consumer division, which makes things like Aquafresh toothpaste, Panadol painkiller and Chapstick lip balm. GSK will sell at least 80% of its stake in the division, which had sales of £10 billion last year. The de-merger will take place in the middle of 2022.
Lewis said in a statement: “GSK Consumer Healthcare is a world-class business with significant prospects and a high-quality leadership team. I am looking forward to being part of its exciting future as an independent company and the very positive impact it can have on people’s health all over the world.”
Read the full story.
Big losses for London shares
08:29 , Graeme Evans
The FTSE 100 index has dived 1.7% in the latest sell-off linked to the fast-spreading Omicron variant.
Demand fears meant commodity stocks were at the forefront of the slump as Anglo American, BP and Antofagasta all fell by 3% or more.
The prospect of tighter travel restrictions, including bans on UK visitors to Europe, meant British Airways owner IAG fell 5% and Rolls-Royce dropped 4%.
Events business Informa was the biggest top flight faller at 6% lower.
The UK-focused FTSE 250 index was down 2%, taking it back to the level last seen in the summer. Upper Crust business SSP and WHSmith both fell more than 5%.
Musk reveals $11 billion tax bill
08:12 , Graeme Evans
Tax returns are due, so what’s the damage if you’re the world’s richest man?
More than £11 billion, according to a Tweet overnight from Tesla boss Elon Musk.
Musk, who has an estimated net worth of $278 billion, faces the bill due to the exercise of stock options awarded in 2012. He doesn’t get a salary or cash bonus.
He said: “For those wondering, I will pay over $11 billion in taxes this year.”
The Tweet comes a month after asking followers whether to sell 10% of his Tesla stock. He has since sold a significant chunk of shares.
Demand fears send FTSE 100 lower
07:35 , Graeme Evans
Oil prices have fallen sharply and investors face another turbulent session as European markets react to the tightening of Covid-19 restrictions ahead of Christmas.
The rapid spread of the Omicron variant has resulted in a fresh lockdown in the Netherlands and other countries are considering their response, including potential bans on UK travellers.
CMC Markets expects the FTSE 100 index to open 100 points lower at 7170, unwinding the gains seen last week after efforts by the Bank of England and the US Federal Reserve to bring inflation back under control.
Chief markets analyst Michael Hewson said: “Today’s European market open looks set to see big falls with sentiment continuing to be fragile, against a backdrop of concerns over rising inflation and central banks whose focus has shifted towards containing inflationary pressure, and a virus that threatens to overwhelm health systems across the globe.”
Brent crude fell more than 3% to $71.17 a barrel today as traders responded to the weakening demand outlook.