UK stocks regained some of their earlier losses on Thursday but closed in the red as the debate around the potential economic damage caused by Omicron intensified.

US Treasury Secretary Janet Yellen weighed in on the debate by saying the new variant could slow the global economy and cause significant problems.

Meanwhile oil prices rallied around 1.5% after the OPEC+ oil producers’ cartel said they were maintaining their policy of incrementally boosting output, sending a positive signal to markets that recent falls in the price were overdone.

At the close the FTSE 100 index was down 0.5% at 7,129 with just a handful of stocks in positive territory.

COMPANY NEWS

Shares in pharmaceutical company Clinigen (CLIN:AIM) surged 17.5% to 741.3p on Thursday afternoon after the company confirmed it had received a takeover approach from Triton Investment Management.

Shares in pharmaceutical giant GlaxoSmithKline (GSK) fell 0.5% to £15.34 after reporting 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 US. The shares gained 1.6% to £16.34.

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 1.2% higher to 135.4p.

Travel firm FirstGroup (FGP) announced its tender offer to return up to £500 million to shareholders at 105p per share had been significantly oversubscribed, sending its shares up 10.2% to 105p.

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:AIM) gained 1.5% to £13.70 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) issued full year results which showed 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. The shares fell 9.4% to 358p.

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. The shares gained 13.5% to £15.00.

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 and editor 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