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“A 0.6% rise in the FTSE 100 on Friday means the UK index has now suffered less than a 2% decline since the eve of the big sell-off on 26 November, which was triggered by shocking headlines declaring Omicron to be the worst ever covid-19 variant,” says Russ Mould, investment director at AJ Bell.
“Under the circumstances, the movement in the index could have been a lot worse given the events of the past week.
“We’ve seen covid rates shoot up, governments reintroduce travel restrictions, the return of masks in shops and public transport, the boss of a leading drug company saying existing vaccines may not be as effective against Omicron, and the head of the US central bank imply that interest rates may go up sooner than expected to combat inflation.
“Investors certainly don’t seem to be in panic mode, with many people happy to buy on the dips.
“A week ago, the travel sector had a big shock as the new variant struck, causing some stocks including International Consolidated Airlines to slump on the market. Fast forward to the present and British Airways is at the top of the FTSE 100 leaderboard, rising 3%.
“The market has been following a similar pattern since Omicron emerged, namely on down days, investors dumped economically sensitive stocks in the commodities, banking and travel space. On up days, these sectors were in demand. However, today we’ve seen the trend fall apart. Oil producers are rising, miners are weak, and banks are flat.”
Wickes
“You have to doff your cap to home improvement retailer Wickes. To achieve a better-than-expected margin performance during a period of sharply rising input costs is no mean feat.
“It is testament to Wickes’ strong supplier relationships and the efficiency of its background processes and digital capability that it has been able to do this without making customers pay through the nose.
“All three of its markets, encompassing local trade, do-it-for-me and DIY, are served by the same product range which makes this task a bit easier.
“Sales may have dipped a little year-on-year as the lockdown boom in home improvements made for tough comparative figures to beat, but they are still up an impressive amount on 2019 levels.
“Higher costs and limited availability of raw materials and labour have been an obstacle to people getting all the domestic projects they want done and this could well create an extended period of pent-up demand – to Wickes’ benefit.
“And the same trends to working at home at least some of the time should also be a driver of continuing upgrades to properties.
“The most recent housing figures from Nationwide showed the heart of the property market is still beating strongly and as part of the wider circulatory system Wickes should be well placed to take advantage of this trend.”
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