Europe close: Shares dip below the line at end of quiet Wednesday
By Josh White
Date: Wednesday 29 Dec 2021
(Sharecast News) - European shares dipped into negative territory by the close after a solid first half to the day on Wednesday, amid thin between-the-holidays trade with little corporate news and economic data to drive sentiment.
The pan-European Stoxx 600 was down 0.18% at 487.63, having earlier come close to the 490-point level it last saw in mid-November.
Germany's DAX was last down 0.7%, while the CAC 40 in France was 0.27% weaker, although London's FTSE 100 managed to close 0.66% firmer at 7,420.69.
"Despite patchy Covid data, we have seen a clear spike in cases on both sides of the Atlantic thanks to the Omicron variant," said IG senior market analyst Joshua Mahony.
"With France reporting over 200,000 daily cases and the US topping 500,000, the rampant spread of this variant looks unstoppable.
"Nonetheless, while we have seen travel stocks such as IAG and Carnival under pressure given the risk to demand, there should be room for tentative optimism given how Omicron appears to be replacing Delta."
Mahony said that while the rapid spread did heighten the chance of short-term restrictions, Omicron's apparently mild outcomes and ability to replace the deadlier Delta version of the virus meant it could bring a swifter return to normality.
Sentiment was dented by weaker sessions in the US and Asia overnight, as worries about the Omicron Covid variant's impact on the global economic recovery persisted.
The only data release worth noting was US pending home sales, which unexpectedly fell in November according to the National Association of Realtors.
Its monthly index came in at 122.4, down 2.2%, and going in the opposite direction to analyst expectations for a 0.5% increase.
On the year, contract signings were 2.7% lower.
"There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," said NAR chief economist Lawrence Yun.
"While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability."
In equity markets, UK retailers were among the leading gainers on hopes of strong sales during the holiday period, with Marks and Spencer up 2%, Next ahead 2.09% and JD Sports Fashion rising 1.8%.
Online protein and make-up merchant THG reversed earlier gains, however, to close down 2.58%.
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