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(Alliance News) - Stock prices in London were lower at midday on Monday on fears about a fresh global surge in coronavirus infections of the Omicron variant, while in the US the prospects for President Joe Biden's massive social spending bill dimmed considerably.
The FTSE 100 index was down 82.56 points, or 1.1%, at 7,187.36. The mid-cap FTSE 250 index was down 284.36 points, or 1.3%, at 22,495.58. The AIM All-Share index was down 10.89 points, or 0.9%, at 1,157.39.
The Cboe UK 100 index was down 1.1% at 713.37. The Cboe 250 was down 1.4% at 19,888.40, and the Cboe Small Companies was down 0.4% at 14,771.29.
In mainland Europe, the CAC 40 stock index in Paris was down 1.1%, while the DAX 40 in Frankfurt was down 1.9%.
"After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode," said Russ Mould, investment director at AJ Bell. "Tighter restrictions across parts of Europe and fears that we could see a circuit breaker in the UK have put a chill in the air for investors."
New coronavirus measures before Christmas have not been ruled out by UK Health Secretary Sajid Javid, who said there are "no guarantees" following a "sobering analysis" from scientific advisers warning about the threat from Omicron.
Javid said while there remains uncertainty about the new variant, it is time to be "more cautious" amid the rapid spread of the strain.
In the FTSE 100, Sage Group was among a handful of stocks in the green, up 0.5%, after the accounting software provider bought retail management system specialist Brightpearl in a USD299 million deal.
Conversely, Rolls-Royce was among the worst blue-chip performers, down 3.8%. The jet engine maker said it has reached an agreement with Qatar Investment Authority to invest GBP85 million in new venture Rolls-Royce Small Modular Reactor.
Rolls-Royce SMR will construct mini nuclear reactors - a tenth the size of current ones - that each can power a million homes. QIA will take 10% of the equity in the venture, joining BNF Resources UK and Exelon Generation as shareholders alongside Rolls-Royce.
Rolls-Royce said the SMR business is now fully funded, having secured GBP490 million through commercial equity and UK government grants.
British Airways-parent International Consolidated Airlines was down 3.1% as Omicron travel curbs look set to leave Europe's winter holiday season in tatters.
Midcap travel stocks Tui, Wizz Air and easyJet were down 3.5%, 3.4% and 1.6% respectively. AIM-listed Jet2 was off 1.6%. Anglo-American cruise ship operator Carnival was down 3.6% ahead of the release of its fourth-quarter earnings in the afternoon.
Over the weekend, the Netherlands announced a strict lockdown over Christmas amid concerns over the Omicron coronavirus variant.
France banned UK holidaymakers entering the country from Saturday, as it tightened border restrictions in response to the growth of the Omicron variant in Britain.
Further, Germany's health authority announced late Saturday that Britain had been added to its list of Covid high-risk countries, which will mean tighter travel restrictions.
Standard Chartered was down 0.5% after the emerging markets-focused lender was fined GBP46.6 million over failings in reporting its liquidity position between March 2018 and May 2019, a UK watchdog said.
The Prudential Regulatory Authority said that while the Standard Chartered's liquidity position was ahead of requirements, the bank made "five errors" when reporting liquidity metrics.
The regulator, part of the Bank of England, had imposed a temporary additional liquidity expectation on StanChart back in 2017, in relation to concerns over the heightened risk of dollar-denominated outflows.
The pound was quoted at USD1.3200 at midday on Monday, down from USD1.3270 at the London equities close Friday, amid fears of tighter UK restrictions and political uncertainty.
Foreign Secretary Liz Truss is to take over responsibility for the UK's future relationship with the EU, Downing Street has said, following the resignation of David Frost.
The Brexit minister resigned with "immediate effect" on Saturday night, having previously agreed with Prime Minister Boris Johnson he would leave his job in January.
Citing "the current direction of travel" of the government, as well as fears over "coercive" Covid measures and the wish for the UK to become a "lightly regulated, low-tax" economy, Frost's departure was described as a "watershed moment" in what had been an extremely damaging week for the prime minister.
Downing Street said Truss would take over ministerial responsibility for the UK-EU relationship, and would lead negotiations to resolve issues with the Northern Ireland protocol. Truss underwent a transformation from being pro-Remain to an avid Brexiteer following the referendum in 2016.
In addition, Johnson is set to face fresh questions over gatherings held at Downing Street during lockdown restrictions after the emergence of a photo showing him, his wife, and staff in the garden of No 10 during the first national lockdown.
The photo, obtained by the Guardian, showed Johnson, his then-fiancee Carrie, and 17 other staff members in the garden on May 15, 2020, with bottles of wine and a cheeseboard on a table in front of the PM.
Number 10 has insisted work meetings often took place in the garden, and a leading human rights barrister said it is unlikely the gatherings broke the law. But the photo was taken at a time when restrictions on meeting others were still in place.
Analysts at OFX summarised: "Uncertainty is weighing heavily on sterling at the start of this week as Covid-19 cases hit record highs and ministers are unable to rule out potential new measures prior to Christmas. Political uncertainty is also weighing on sterling. There have been a number of stories in recent weeks that appear to suggest the UK government was not following Covid restrictions last year."
The euro was priced at USD1.1273, little changed from USD1.1275. Against the Japanese yen, the dollar was trading at JPY113.56, unmoved from JPY113.58.
Brent oil was quoted at USD71.40 a barrel Monday at midday, down sharply from USD73.70 late Friday in London. Gold stood at USD1,797.53 an ounce, down from USD1,803.50.
US stock market futures were pointed to a sharply lower open as the future of US President Biden's massive social spending bill was thrown into doubt after the measure lost the crucial vote of a moderate Democrat.
The Dow Jones Industrial Average was called down 2.5%, the S&P 500 down 1.1% and the Nasdaq Composite down 1.8%.
US Senator Joe Manchin dealt what seemed to be a fatal blow Sunday to Biden's massive social spending bill, saying he could not support the legislation's passage through the divided chamber.
The moderate Democrat's vote is crucial to getting the USD1.75 trillion 'Build Back Better' bill through the Senate, and Biden - along with other senior Democrats - has spent weeks trying to secure his support after it was green-lit by the House of Representatives in November.
"I can't vote for it and I cannot vote to continue with this piece of legislation. I just can't," Manchin, a senator from the predominantly Republican state of West Virginia, said on Fox News Sunday. "I've tried everything humanly possible, I can't get there...This is a no."
Oanda Markets analyst Jeffery Halley commented: "Democrat Senator Joe Manchin appears to have blindsided the White House and his own Congressional caucus by announcing he won't support President Biden's USD2 trillion Build Back Better spending programme. That effectively leaves it dead in the water now and the Biden legislative agenda in disarray. Goldman Sachs has already trimmed next years US growth forecast in response."
Ahead in the US earnings calendar, athletic apparel maker and Dow member Nike will report second-quarter earnings after the closing bell in New York on Monday. The stock was down 0.8% in pre-market trade.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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