Europe midday: Shares extend gains despite Omicron variant fears
European share extended gains on Monday as they rebounded from Friday’s sharp sell-off in response to the emergence of the Omicron variant of Covid-19, with travel stocks back in favour and investors focusing on a potential bid for UK telecoms group BT.
The pan-European Stoxx 600 index was up 0.82% in early deals after falling more than 3.6% in the last session as government’s moved to ban arrivals from Southern Africa where the variant was discovered. All major regional bourses were higher.
"We’ve always known that new variants could well be a problem, and yet over the past 12 months there have been many reports of possible candidates that might be a concern that have come and gone without getting the sort of market reaction we saw on Friday," said CMC Markets analyst Michael Hewson.
"It’s also not that clear this newly renamed Omicron variant is any more deadly than the current more prevalent Delta variant, which for the most part is still causing its own fair share of problems in Europe as it is, having replaced Alpha earlier this year, without the same sort of market reaction."
"Initial reports out of South Africa would appear to suggest that despite the number of mutations currently identified, there have been no reports of hospitalisations or deaths as a result of anyone being diagnosed with this variant, which throws into sharp focus why last week’s market reaction was so violent."
Oil prices rose after Brent crude dropped as much as 13% on Friday. International benchmark Brent crude and US futures rose as the Organisation of the Petroleum Exporting Countries (OPEC) was set to meet this week and decide whether to adjust its output from its current level to an additional 400,000 barrels per day.
In equity news, shares in BT jumped 6% after a report in India's Economic Times said Reliance Industries was weighing a bid for the British telecoms group.
Travel and leisure-related stocks were back in favour as investors took the opportunity to bargain hunt, with cruise line Carnival, holiday operator TUI and airport concession chain WH Smith all higher. Airline stocks flew, led by Wizz Air and followed by IAG, Ryanair, easyJet and Lufthansa.
Shares in French auto supplier Faurecia fell more than 5% as the company cut its full-year guidance for a second time, citing a drop in European car production, the impact of supply bottlenecks and Covid restrictions on operations and one-off costs in the US.