Market optimism falls as Omicron variant cases rise at alarming rate

Traders had a subdued day after 48 hours of hope that the Omicron variant of Covid-19 may not be as concerning as first thought.

But rising case numbers and news that the UK Government would announce a series of further restrictions dampened the mood.

Even a falling pound, hitting levels not seen since almost a year ago, failed to help the FTSE 100 rise. It closed down 2.55 points, or 0.03%, at 7337.35.

Shares tend to rise when the pound falls as investments look “cheaper” to foreigners who trade in dollars.

Joshua Mahony, senior market analyst at IG, said: “Sterling has been on the receiving end of selling pressure today, with the UK on the cusp of a fresh bout of restrictions thanks to the growth in Omicron cases.

“Goldman Sachs has shifted their Bank of England rate expectations in response to this latest surge in Omicron, with analysts across many of the top investment banks expecting to see the monetary policy committee hold off in favour of a February rate hike.

“Travel and leisure stocks are also lagging behind in the UK, with recent optimism starting to wane on the prospect of greater government oversight.”

In France and Germany markets took heavier hits, down 0.71% and 0.78% respectively. At close, a pound was worth 1.323 dollars and 1.168 euros.

The biggest risers on the FTSE 100 were Admiral Group, up 81p at 3,102p; Berkeley, up 109p at 4,744p; Croda, up 225p at 10,285p; Flutter, up 205p at 11,245p; and Informa, up 8.9p at 505.8p.

The biggest fallers on the FTSE 100 were Darktrace, down 19.2p at 409.8p; 3i Group, down 49p at 1,405p; DCC, down 168p at 5,654p; Rolls-royce, down 3.16p at 128.64p.

The pound took a hit as a result of rising Omicron cases.