Markets fall on tough day for travel and energy stocks

The FTSE 100 added to a five-day losing streak on Wednesday as Omicron worries caused oil majors and travel giants to weigh on the stock index.

The index dropped by 47.89 to 7,170.75, a 0.7% fall, meaning it has not made any gains across a day since last Tuesday.

When looking for a culprit, analysts pointed their fingers squarely at the new Covid variant which is now sweeping the world.

“The FTSE 100 (is) once again finding itself weighed down by concerns over Omicron, with weakness in energy prices and travel and leisure weighing on the UK benchmark,” said Michael Hewson, an analyst at CMC Markets.

British Airways owner IAG looks like it will walk away from a one billion euro (£851 million) deal to buy Spain’s Air Europa, adding to the misery of a stock that was already being hit by a sell-off in the travel sector.

Other big fallers were Rolls-Royce, which makes money when its plane engines are in the sky, and FTSE 250 airlines Wizz, EasyJet and Tui.

“Apart from some gains in European markets, stocks remain on the back foot, as investors across the globe prepare for a busy 24 hours in the world of central banking,” said IG chief market analyst Chris Beauchamp.

“The most important decision comes through tonight, with the Fed expected to quicken the pace of tapering and also provide an updated dot plot that will allow markets to spend their Christmas and New Year examining the tea leaves and deciding on what 2022 might bring in terms of rate hikes.

“Today’s CPI (Consumer Prices Index) figure puts plenty of pressure on the BoE to move, but given how the Omicron situation in the UK appears to have changed so dramatically this week the MPC (Monetary Policy Committee) will feel justified in holding policy unchanged for now.”

In the US, the S&P 500 was trading in the red by 0.4% ahead of the Fed’s announcement, while the Dow Jones was down 0.1%.

In Europe markets were feeling more buoyant, with Germany’s Dax rising 0.2% and the Cac in Paris 0.5% in the green.

In currency markets, sterling dropped 0.1% against two big international peers. By the close of London’s markets one pound could buy 1.3207 dollars or 1.1731 euros.

On what was just a mildly poor performance for London’s stocks, cinema chain Cineworld was rocked.

Shares closed down more than 39% after the firm was slapped with a 1.2 billion Canadian dollar (£720 million) penalty by a court in Canada.

The firm had been taken to court by Canada’s Cineplex, which had been left at the altar by Cineworld. The two had been close to a tie-up which would have created the biggest cinema chain in North America.

But in mid-2020, amid a devastating pandemic, Cineworld walked away, saying that Cineplex had breached parts of the agreement. Cineplex rejected this and took the British company to court.

Cineworld’s fellow FTSE 250 member Currys also ended the day deep in the red, down 9.3%, after warning that sales have slowed down in the run-up to Christmas.

The biggest risers on the FTSE 100 were DCC, up 494p at 6,000p; Darktrace, up 22.6p at 398.6p; Ferguson, up 305p at 12,720p; Segro, up 32.5p at 1,418p; and Croda, up 220p at 10,335p.

The biggest fallers of the day were Antofagasta, down 74.5p at 1,308p; IAG, down 6.76p at 125.8p; Rentokil, down 25.6p at 522p; Next, down 318p at 7,736p; and Whitbread, down 101p at 2,713p.