Travel, energy stocks lift FTSE
Brent reclaims $80/barrel
By Samuel Indyk
Investing.com – The FTSE 100 began 2022 with a bang as a surge in travel and energy stocks lifted the index.
Although cases of the Omicron COVID variant remain at historically high levels, the illness associated with Omicron is less severe and the return of lockdowns similar to earlier waves of the pandemic does not appear to be likely, and investors are now looking beyond the short-term impact of Omicron on the economy.
That helps explain why shares of UK-based airlines were performing well on Tuesday. British Airways parent IAG (LON:ICAG), and budget airlines easyJet (LON:EZJ) and Wizz Air (LON:WIZZ) were some of the best performing stocks on the London Stock Exchange. Although a high number of flights have been cancelled in recent days because airlines are struggling with staff issues due to COVID, in the long-term, travel demand is not expected to be greatly affected by Omicron.
The OPEC+ group of energy producers, which includes Russia, announced they would add 400,000 barrels per day to production in February, in line with expectations.
The higher oil prices have helped energy companies surge higher with FTSE 100 components Royal Dutch Shell (LON:RDSa) and BP (LON:BP) both rising by over 5%. Smaller energy company Petrofac (LON:PFC) rose by 10%.
The pound was strong on Tuesday with EUR/GBP dropping to its lowest level since February 2020, before the markets were severely affected by COVID. The divergence in policy between the Bank of England and the European Central Bank continues to weigh on the currency cross.
The two largest cryptocurrencies by market cap have been stuck in a holding pattern in recent weeks with Bitcoin around 30% from its record high as traders prepare for the impending stimulus withdrawal from the Federal Reserve.
MARKET WRAP: FTSE flies on first trading day of the year, Brent hits $80/barrel
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