UK stocks dropped in early trading after a selloff in overseas markets following the first case of the Omicron variant in the U.S. and a warning from technology firm Apple that demand for its latest iPhone had weakened.

Meanwhile, investors were also watching energy prices ahead of an meeting of OPEC+ oil producers, which it is hoped will lead to an increase in supplies after the U.S. and others released crude from their strategic reserves.

At 8.45am the FTSE 100 index was down 53 points or 0.8% at 7,115 points with just a handful of stocks in positive territory.

COMPANY NEWS

Pharmaceutical giant GlaxoSmithKline (GSK) was one of the few gainers, its shares moving up 0.1% to £15.43 after it reported that its sotrovimab vaccine had shown ‘ongoing activity against all tested variants of concern and interest defined by the World Health Organization’ including key mutations of the Omicron variant.

Oil major Royal Dutch Shell (RDSB) announced that it would begin buying back up to $1.5 billion (£1.1 billion) of A and B shares from today in the first instalment of its $7 billion capital return programme after the sale of its Permian assets in the U.S. Shares drifted off 0.2% to £16.05 in line with the market.

Business services provider Serco (SRP) reiterated its guidance for the current financial year and gave its initial guidance for next year, which it said would be ‘in line with analysts’ consensus’.

Analysts are currently forecasting a small drop in revenues and pre-tax profits for next year followed by a recovery in the 2023 financial year, which seemed to satisfy investors, sending the stock 0.3% higher to 134p.

Travel firm FirstGroup (FGP) announced its tender offer to return up to £500 million to shareholders at 105p per share had been significantly over-subscribed, sending its shares up 1.1% to 96.3p.

In total the company bought back 476.19 million shares, representing 38.9% of its issued capital, which will be cancelled. The buyback was financed with the net proceeds of $3.1 billion from the sale of its First Student and First Transit businesses in the U.S.

Shares in specialist investment firm Impax Asset Management (IPX) gained 1.9% to £13.75 after it posted an increase of £17 billion or 84% in assets under management to £37.2 billion in the year to September thanks to record net inflows of £10.7 billion.

Revenues for the year rose 63.5% to £143 million, while operating margins increased from 26.6% to 39% driving a 174% gain in pre-tax profits to £45.7 million.

Investment platform AJ Bell (AJB) also reported an increase in full year results, with assets under administration rising 29% to £72.8 billion in the 12 months to September thanks to net inflows of £6.4 billion.

Revenues were 15% higher at £145.8 million, while pre-tax profits were 13% higher at £55.1 million. Shares drifted off 3.5% to 381p.

Auction Technology Group (ATG), which provides the technology behind many of the world’s curated online auctions, posted a 34% increase in revenues for the year to September.

However, costs related to its initial public offering and the acquisition of LiveAuctioneers pushed it to a pre-tax loss of £27.3 million, sending shares down 3.3% to £12.78.

SHUFFLING THE DECKS

In its latest quarterly review, index provider FTSE Russell, part of the London Stock Exchange Group (LSE), announced several changes to the FTSE 100 and FTSE 250 indices.

Cybersecurity firm Darktrace (DARK) will exit the FTSE 100 after its brief stint, along with chemicals group Johnson Matthey (JMAT) which loses its spot after 19 years in the premier index. Both will be relegated to the FTSE 250 index.

In their place, veterinary medicine maker Dechra Pharmaceuticals (DPH) and industrial products maker Electrocomponents (ECM) are promoted. The changes take place at the close of business on 17 December and become effective from 20 December.

In the FTSE 250 mid-cap index, investment company Petershill Partners (PHLL) and financial group Provident Financial (PFG) replace electricals retailer AO World (AO.) and hospitality firm Restaurant Group (RTN).

Disclaimer: The author of this report owns shares in AJ Bell Limited, the owner and publisher of Shares magazine

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Issue Date: 02 Dec 2021