UK shares muted as COVID fears dull Christmas cheer

UK shares were subdued on Thursday, after hitting 22-month highs in the previous session, as a surge of COVID-19 cases offset optimism around a “Santa Claus rally” in thin year-end trading.

The FTSE 100 (.FTSE) was flat, with financial and energy stocks weighing on the benchmark index, while the domestically focussed mid-cap index (.FTMC) lost 0.1 per cent on weaker travel and leisure stocks (.FTNMX405010).

The UK reported a record 183,037 COVID-19 cases on Wednesday, over 53,000 more than the previous high registered just a day earlier, with the Omicron variant accounting for 90 per cent of all community infections.

Diversified financial stocks, including London Stock Exchange , fell 1.6 per cent in morning trade, while life insurance stocks (.FTNMX303010) declined 0.2 per cent on the FTSE 100.

Oil majors BP and Royal Dutch Shell (RDSa.L) fell nearly 0.2 per cent each after top consumer China cut import quotas.

The benchmark FTSE 100 has gained 14.8 per cent so far this year and is heading for its best annual performance in 12 years despite concerns around the new Omicron COVID-19 variant.

Industrial stocks (.FTNMX551020) have outperformed the FTSE 100 and the FTSE 250 this year, gaining 32.6 per cent and on track for their best yearly performance since 1998. Ferguson (FERG.L), Pagegroup (PAGE.L), Diploma (DPLM.L) and Mitie group (MTO.L) have added more than 50 per cent this year.

“There has been a cracker of a performance this year from companies which have shared on the spoils of reopening after the pandemic,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“As demand bounced back for commodities and industrial components, chemicals and services, companies like Ashtead, Glencore and Meggitt and Croda International have been pushed to the top of the FTSE 100 leader board this year”

Rental equipment provider Ashtead Group has surged 77 per cent so far this year, leading the gains on the FTSE 100 index.

UK markets will close early on Friday for the New Year’s Eve holiday.