UK SHARES HEAD FOR WEEKLY LOSS ON OMICRON CONCERNS, INFLATION RISKS

Sat 18 December 2021:

UK’s FTSE 100 slipped on Friday and was on course for a weekly loss, as concerns surrounding the fast-spreading Omicron variant and inflationary risks outweighed strong retail sales data.

The commodity-heavy FTSE 100 index was down 0.1%, with oil majors Royal Dutch Shell and BP falling about 1% each, tracking weakness in crude prices as surging COVID-19 cases raised fears that new curbs may hit fuel demand.

Shares of HSBC dipped 0.3% after UK’s financial regulator said it had fined the bank 63.95 million pounds ($85.16 million) for failings in its anti-money laundering processes.

Retailers gained 0.9% after data showed sales rose faster than expected last month, helped by Black Friday discounts, early Christmas shopping and no lockdown restrictions.

“Some of that strength was because households were bringing forward their Christmas shopping amid worries about shortages, shipping delays, even before Omicron,” said Bethany Beckett, UK economist at Capital Economics.

“Still retailers are positioned to deal with Omicron better than sectors like hospitality.”

Domestically focussed mid-cap stocks were flat, even as retailers Marks and Spencer and WH Smith gained on upbeat retail data.

However, a survey showed consumer confidence was down heading into December as the emergence of Omicron and inflation worries hit spending plans.

The Bank of England surprised investors on Thursday, increasing interest rate by 15 basis point, the first hike since the start of the pandemic, as it seeks to tackle a surge in inflation.

-Reuters

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