Bullish FTSE jumps 1.3% as omicron fears subside

The FTSE 100 made a bullish start to the year, with big gains for banks and travel stocks on Tuesday after Wall Street set another round of records overnight.

The FTSE 100 made a bullish start to the year, jumping 1.3% on Tuesday as Wall Street set another round of records overnight.

The blue-chip index was up 1.3%, or 100 points, at 7,484 as 2022 got off to a flying start, with traders cheered by fresh highs for the Dow Jones and S&P 500. Apple became the first US company to be valued at more than $3tn.

City analysts are predicting the FTSE could push through 8,000 this year after the index clocked up its best annual gain since 2016 last year, despite Covid-19 still holding back the global economy. 

Richard Hunter, head of markets at Interactive Investor, said New Year optimism helped investors ‘accentuate the positives’ this morning, with technology stocks being an early focus thanks to strong results from Apple and electric car maker Tesla.

‘Despite continually rising cases of omicron, there is a growing belief that the variant is less deadly if more transmissible, particularly when coming up against a wall of triple-jabbed individuals,’ he said.

‘Further solace was taken from the decision of the US Food and Drug Administration to authorise the Pfizer-BioNTech booster shot for 12- to 15-year-olds. As such, the impact of the variant on the global economic recovery could yet prove less damaging than had previously been feared.’

Hunter said the imminent company reporting season will ‘add further colour to the impact of both the variant and inflationary pressures on earnings, although the early signs are that the consequences may be less detrimental than in previous cases of lockdowns and restrictions’. A strengthening dollar could further boost the UK market. 

International Consolidated Airlines (IAG) was the biggest mover, soaring 10%, or 14p, to 157p, as the owner of British Airways was buoyed by hopes that omicron will not shut down air travel to the same extent as previous variants. 

Oil majors and miners also benefited from an easing of concerns over potential lockdowns, with BP (BP) up 4.1%, or 13p, at 344p, and Royal Dutch Shell (RDSA) up 3.7% at £16.83. Miner Glencore (GLEN) rose 3.7% to 389p.

Banks were also strong performers as interest rate rises, which benefit them, are likely to stay on track if the economy isn’t derailed by omicron. NatWest (NWG) gained 4.1% to trade at 235p, HSBC (HSBA) added 3.7% to hit 465p, and Lloyds (LLOY) gained 3.6% to 49p.

The FTSE 250 climbed 1.3%, or 322 points, to 23,803, with ‘mid caps’ led by travel stocks.

Budget airline Wizz Air (WIZZ) climbed 9.9%, or 418p, to £46.09, followed by peer EasyJet (EZJ), which added 8%, or 44p, to trade at 600p. Package holiday operator Tui (TUI) advanced 7.1% to 248p, while cruise operator Carnival (CCL) was up 6.8% at £14.79.

In investment trust news, Murray International (MYI ) jumped 2.2% to £11.82 after the trust reduced its annual management fee from 1 January to 0.5% of net assets up to £500m and 0.4% thereafter. Previously, it had charged 0.5% on assets up to £1.2bn and 0.425% after.

Princess Private Equity (PEY ) was up 1.4% at €14.65 after reporting a 0.4% rise in the fund’s net asset value in November following distributions made from the sale of Pacific Bells, a leading franchisee of the Taco Bell brand, for €16.4m, and the €9.8m made from the sale of Hortifruti Natural da Terra.

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