Investors were given the strongest hint yet that the Omicron variant is no more than short-term noise.
Opec, the cartel of the world’s most powerful oil producers, led by Saudi Arabia, has decided to stick with a planned 400,000 barrel a day production hike for January.
It had been feared it would scale back the increase to just 200,000 following the emergence of the new Covid strain. But the decision to stick to its guns was seen as a vote of confidence.
Opec, the cartel of the world’s most powerful oil producers, led by Saudi Arabia, has decided to stick with a planned 400,000 barrel a day production hike for January
Opec is one of the important bodies on the planet and its decisions over oil have knock-on effects for other major industries such as aviation and automotive.
Fawad Razaqzada, market analyst at Think Markets, said: ‘With current sentiment being so fragile a cut would have upset investors.
‘Opec are saying we don’t know much about the new variant and we are not changing policy until there is a concrete information.
‘The worst thing would have been a knee jerk reaction, this is the best we could have hoped for.’
Stock Watch - Jubilee Metals
Africa focused miner Jubilee Metals said it produced an ‘exceptional performance’ in its latest financial year as profits jumped by 323 per cent.
Revenues increased 143 per cent in the year to end June, with profits rising to £52million from £12.3million.
Jubilee’s platinum operations produced 50,000 ounces, a 23 per cent rise on 2020, while the chrome operations doubled output to 751,000 tonnes.
Recent moves have seen Jubilee expand into copper in Zambia.
The company is targeting production of 25,000 tonnes of copper per year within the next four years.
Shares jumped 7.9 per cent, or 1.25p, to 17.1p.
The move will also help cool tensions with President Joe Biden, who has called on Opec to ramp up production as the world economy recovers from the pandemic. The US has been releasing barrels from its strategic reserves since November to meet demand.
Brent Crude prices pushed higher by 1 per cent to $70 per barrel. Shell gained 1.34 per cent, or 21.4p, to close at 1629.2p and BP added 1.1 per cent, or 3.7p, to 336.6p.
Industries that consume a lot of oil were also on the march with British Airways-owner IAG up 0.4 per cent, or 0.56p, to 132.32p and miner Rio Tinto moving up 0.6 per cent, or 29.5p, to 4721p.
But it was not enough for the FTSE 100 to make a gain and the index fell 0.6 per cent, or 39.47 points, to 7,129.21.
Notable fallers among the blue chips included Scottish Mortgage Investment Trust as backers questioned some of the firm’s holdings.
Scottish remains a loyal backer of Chinese retail giant Alibaba, despite the firm seeing its shares tumble this year amid an online regulatory crackdown on internet companies by Beijing.
Alibaba missed estimates for quarterly sales at its latest earnings update last month and predicted slowing revenue growth for 2022.
Scottish Mortgage Investment Trust also has holdings in electric car maker Tesla as well as Netflix and Amazon and Chinese ecommerce giant Baidu.
Shares were down 4.2 per cent, or 64p, at 1439p.
Further down the market, Serco said it expected a ‘significant’ hit to sales and profits next year, as its work running the Government’s Covid-19 test and trace system is expected to ease.
The group has been given a big financial boost from Covid-19 related contracts, with profits expected to jump 38 per cent to £225million in 2021, on revenues 10 per cent higher at £4.4billion.
But it is forecasting a ‘rapid wind-down’ of these coronavirus services during the first half of 2022, which it said will ‘have a significant impact on both revenue and profits in 2022’.
Rupert Soames, chief executive of Serco, said: ‘For all our sakes we hope that 2022 will see sharply reduced need for government spending on Covid-related services and this will reduce revenues and profits in 2022.
However, our strong order intake in 2021 means that we expect to deliver good growth in those parts of our business not involved with Covid-19 services.’
Despite the warning, shares ticked up 1.2 per cent, or 1.6p, to 135.4p.
Also on the FTSE 250, Halfords shares added 6.4 per cent, or 20.6p, to close at 341p after it successfully raised £63million from City investors.
Proceeds from the placing of shares at a price of 320p will go towards the acquisition of tyre servicing business National.
It didn’t help the FTSE 250, however, with the junior market ending the day down 1 per cent, or 227.89 points, at 22,684.84.