London open: Stocks nudge down in quiet trade

London stocks nudged lower in early trade on Thursday, having hit a 22-month high a day earlier, with volumes thin as many traders remained away from their desks until the new year.

At 0845 GMT, the FTSE 100 was down 0.1% at 7,411.33 as investors continued to mull the implications of the Omicron variant.

Oanda analyst Jeffrey Halley said: "Omicron fears continued to fade overnight, in North America at least, propelling the S&P 500 and Dow Jones to record closes, lifting oil prices, and weighing on the US Dollar. Even gold managed to recoup most of its intra-day losses as optimistic long positions were once again culled.

"The upbeat mood was helped along by better than expected US retail sales and larger than expected drops in US crude oil and gasoline inventories, suggesting that despite the current virus wave, the US domestic economy continues to power forward. A dearth of heavy-duty data releases globally this week continues to leave markets driven by sentiment and by sentiment, I mean omicron headlines."

Away from Covid, market participants were digesting the latest survey from mortgage lender Nationwide, which showed that house prices recorded a bigger-than-expected rise in December and marked their strongest year since 2006, but there could be a cooling next year.

Prices in December increased by 1% month on month - compared with forecasts of 0.5% - driven by strong demand, the stamp duty tax break, and a shortage of homes on the market.

December house prices were up 10.4% year-on-year and the average price of a property stood at record high of £254,822.

"It appears likely that the housing market will slow next year, since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax," Robert Gardner, Nationwide's chief economist, said.

"Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence. Indeed, house price growth has outpaced income growth by a significant margin over the past 18 months and, as a result, housing affordability is already less favourable than before the pandemic struck."

However, he added that the market "still has significant momentum and shifts in housing preferences as a result of the pandemic could continue to support activity and price growth".

"Indeed, the Omicron variant could serve to reinforce the shift in preferences in the near term."

Britain's housing market rebounded strongly after the first Covid-19 lockdown last year. Since then it has soared on the back of the government’s now-discontinued stamp duty holiday and demand for bigger properties as more people work from home.

Gardner said mortgage approvals for house purchases continued to run above pre-pandemic levels, despite the surge in activity seen earlier in the year - in the first 11 months of 2021 the total number of property transactions was almost 30% higher than over the same period of 2019.

"At the same time, the stock of homes on the market has remained extremely low throughout the year, which has contributed to the robust pace of price growth," he said.

Still to come on the macro front, investors were eyeing the release of US initial jobless claims at 1330 GMT.

Unsurprisingly for this time of year, corporate news was basically non-existent, but Harbour Energy rose after saying it had completed the drilling of the Dunnottar exploration well in licence P2399 in the UK North Sea.

Market Movers

FTSE 100 (UKX) 7,411.33 -0.13%
FTSE 250 (MCX) 23,532.86 0.07%
techMARK (TASX) 4,572.80 -0.09%

FTSE 100 - Risers

Sage Group (SGE) 857.20p 0.82%
JD Sports Fashion (JD.) 216.60p 0.65%
SEGRO (SGRO) 1,424.00p 0.49%
Admiral Group (ADM) 3,165.00p 0.48%
Croda International (CRDA) 10,240.00p 0.44%
Scottish Mortgage Inv Trust (SMT) 1,331.00p 0.41%
Land Securities Group (LAND) 769.00p 0.39%
Informa (INF) 518.40p 0.39%
SSE (SSE) 1,678.00p 0.36%
WPP (WPP) 1,133.00p 0.35%

FTSE 100 - Fallers

BT Group (BT.A) 167.65p -1.44%
London Stock Exchange Group (LSEG) 6,980.00p -1.25%
International Consolidated Airlines Group SA (CDI) (IAG) 141.70p -1.23%
Evraz (EVR) 600.00p -1.15%
Flutter Entertainment (CDI) (FLTR) 11,215.00p -1.10%
Melrose Industries (MRO) 156.60p -0.85%
Standard Chartered (STAN) 443.90p -0.69%
DCC (CDI) (DCC) 6,068.00p -0.69%
Entain (ENT) 1,649.00p -0.66%
Polymetal International (POLY) 1,281.50p -0.66%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 240.00p 4.35%
Darktrace (DARK) 424.40p 2.27%
ICG Enterprise Trust (ICGT) 1,288.00p 1.90%
PureTech Health (PRTC) 284.50p 1.61%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 824.00p 1.60%
Schroder Oriental Income Fund Ltd. (SOI) 270.00p 1.50%
Baillie Gifford Shin Nippon (BGS) 223.00p 1.36%
Virgin Money UK (VMUK) 182.25p 1.36%
Harbour Energy (HBR) 358.20p 1.30%
Petershill Partners (PHLL) 273.00p 1.30%

FTSE 250 - Fallers

Rank Group (RNK) 154.00p -2.53%
Renishaw (RSW) 4,790.00p -1.80%
Babcock International Group (BAB) 319.60p -1.51%
Currys (CURY) 114.50p -1.29%
Herald Investment Trust (HRI) 2,450.00p -1.21%
Grainger (GRI) 314.20p -1.19%
Wizz Air Holdings (WIZZ) 4,163.00p -1.14%
Hochschild Mining (HOC) 127.40p -1.09%
Wood Group (John) (WG.) 186.00p -1.06%
Ninety One (N91) 272.00p -1.02%